Directors are liable for unpaid PAYE

The taxpayers were directors and shareholders of IHL. In 2008 the company entered administration by which time several cheques for PAYE and National Insurance had been dishonoured. The business and assets were sold to BVL and the taxpayers became employees of that company. 

In March 2009 the administrators submitted a P35 PAYE return for all the employees of IHL for 2008-09. In 2010 a second P35 for the year was filed with P14s showing substantial additional earnings for the three taxpayers only. These amounts of PAYE and National Insurance were not paid to HMRC. B and H’s tax returns for 2008-09 included the income shown on both P14s with a credit for PAYE but M’s did not. 

HMRC issued directions under reg 72 of the Income Tax (PAYE) Regulations 2003 to recover from the taxpayers the PAYE and National Insurance not accounted for by IHL. They appealed ...