Personal liability notice issued against directors

The company’s main business was the development of software and applications. It submitted two repayment returns for February and March 2020 which HMRC reviewed before making the repayment. The absence of purchase invoices to support input tax claims in these periods meant that HMRC extended its compliance checks to the company’s date of registration on 1 June 2018. The officer issued a ‘best judgment’ assessment (VATA 1994 s 73(1)) for underpaid output tax and also input tax not supported by proper evidence – a total of £37 155. The errors were treated as ‘deliberate not concealed’ with a penalty issued to the company for £21 457. The whole penalty was transferred to the two directors using the power given by FA 2007 Sch 24 para 19(1).

The First-tier Tribunal noted that the absence of purchase invoices during the compliance review was caused by the theft of the director’s...