Security for payment of future PAYE and VAT liabilities

After the liquidation of his business the taxpayer set up as a sole trader in a new venture. Given the similarities of the activities HMRC considered the new one to be a continuation of the previous one. The officer considered it necessary to obtain a security deposit of about £31 300 from the taxpayer for VAT and PAYE liabilities. This was because of his poor compliance record with other companies linked to him all of which had ceased to trade owing substantial tax debts.

The taxpayer appealed. He was ‘sympathetic of the need for HMRC to protect its position given his track record’ but thought the amount required was too high. He wanted to settle his tax debts and was paying VAT monthly. In addition he had put in place controls such as weekly meetings with his accountant and bookkeeper.

The First-tier Tribunal decided to reduce the...