MO Williams v HMRC

In MO Williams v HMRC (TC01988 – 24 May) a company (IL) paid one of its shareholders (W) who owned 65% of its share capital but was not a director without deducting PAYE and NIC. IL subsequently went into liquidation and HMRC issued a direction under Income Tax (PAYE) Regulations SI 2003/2682 reg 72(5) requiring W to pay the tax and NIC. The First-tier Tribunal dismissed W’s appeal finding that he had been a ‘shadow director’ and that he had known that IL had ‘wilfully failed to deduct the amount of tax which should have been deducted from the payments’.

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Why it matters: SI 2003/2682 reg 72(5) provides that where an employer has failed to deduct tax from payments to an employee HMRC may direct that the tax should be recovered from the employee rather...