Inaccuracies not proved

Personal liability of director to pay a VAT penalty

After an enquiry HMRC raised assessments on We Are Electricals Ltd and adjusted its VAT returns. It also charged the company a penalty of £416 415 but told the taxpayer that as a director of the company he was personally liable to pay it because the business was insolvent.

The main issues arising in the enquiry were a discrepancy on the company’s annual accounts and that it had failed to account for output tax on goods it had bought VAT-free from a French supplier.

The taxpayer said the accounts issue was irrelevant because the June accounts were incorrect and did not reflect the credit to sales needed for refunds and cancelled orders. On the output tax the taxpayer said many of the goods had been bought and sold by the company – WAE+ Ltd – that took...