Failed Application to Debar from Proceedings regarding Company Officer Liability Notice

Jeneruhl Trading Ltd and another v Revenue and Customs Commissioners [2024] UKFTT 735 (TC)

This is an interesting case where the taxpayer applied to the Tribunal for HMRC to be debarred from proceedings because of a perceived error of law. 

HMRC denied an input tax deduction and raised a VAT assessment and penalty assessment against Jeneruhl Trading Limited under the Kittel principle, i.e. that they knew or should have known of fraudulent transactions in their supply chain.  HMRC also raised a Company Officer Liability Decision Notice against the one director of the company under section 69D VAT Act 1994 (“VATA”).

The Appellants applied to the Tribunal for HMRC to be debarred from proceedings as they considered that HMRC were saying that, simply because the director was the sole director of the company, he was automatically responsible for the s69D liability.  The Appellants considered this would not meet the requirements of s69D VATA in demonstrating that the actions of the company which gave rise to that liability were attributable to an officer of the company.

The judge did not agree that debarring was appropriate.  He noted that HMRC referred to:

• the director being operationally responsible for elements of the company’s business,
• the fact that the director was the only person making submissions to HMRC on behalf of the company,
• that purchase invoices were made out to the company but at the director’s address,
• the director’s signature on the self-billing agreement,
• the provision of the company records to HMRC by the director and
• that he was responsible for the operation and running of the business. 

These were held to be indicators that the director was ‘operationally involved’ and could be considered an ‘executive’ rather than ‘non-executive’ director.  The judge held that there was a reasonable prospect of HMRC succeeding in their assertion of attributable actions and so, debarring was not appropriate. 

See the full case here.