Who is liable?

Identity of employer for PAYE

The taxpayers were companies that carried on a variety of business activities at the Grand a former hotel in Folkestone Kent. Several people worked at the hotel as employees under contracts that did not identify any of the companies as their employer. Their contracts of employment purported to be with ‘The Grand’ but no such entity existed. The employees’ payslips were generated in the name of Heritage Hotels but that company had been dissolved in 2007. Two years later when this was realised payslips were produced in the name of ‘The Grand Folkestone Hotel’.

HMRC considered that the taxpayers were liable to account for PAYE and National Insurance for those employees. It raised determinations under the Income Tax (PAYE) Regulations SI 2003/2682 reg 80 allocating liabilities on a percentage basis by reference to the taxpayers’ accounts. It also imposed...