The taxpayers were shareholders in two companies. HMRC believed both companies submitted VAT returns containing deliberate inaccuracies relating to input tax. It issued assessments to recover the input tax and also imposed penalties. The companies went into liquidation so HMRC used its powers to give personal liability notices to the taxpayers making each liable to 50% of the penalties charged on the companies. HMRC served the notices on the basis that the taxpayers were officers of the companies and the inaccurate returns could be attributed to them.
Each taxpayer denied involvement saying the other was responsible for running the companies. HMRC had investigated Mr M’s tax position under code of practice 9. Mr B asked HMRC to produce material relating to that investigation but Mr M objected on the basis that they contained confidential information. HMRC sought a direction from the First-tier Tribunal for permission to disclose....
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