Tribunal case – Postponing income tax payable
An appeal by a taxpayer to postpone income tax payable in respect of an amendment to his self assessment return was refused by HMRC. The taxpayer subsequently appealed HMRC’s decision not to postpone the tax due to the tribunal.
The main issue concerned a payment made to the taxpayer of £625,000 by way of a credit to a director’s loan account and described as payment for consultancy services. A further payment of £50,000 was made in 2008 and again credited to the director’s loan account.
The taxpayer had submitted his 2006 tax return on 30 January 2007 and made an amendment a few months later, well within the statutory time limit. The amended return contained self employment pages for the first time. These reflected a figure of work in progress and an additional amount to be charged based on a spreading relief adjustment.
HMRC contended that those monies were not self-employment income but rather employment income which was paid to the taxpayer for performing his duties as a director of the company. The taxpayer disagreed with these contentions and HMRC issued determinations against the company for failing to operate PAYE and deduct the appropriate income tax and Class 1 national insurance contributions from the payments of £625,000 for 2006 and £50,000 for 2008.
The taxpayer sought to postpone the hearing until the question of whether the income was from employment or self employment had been decided by a Tribunal. The Tribunal refused the request on the grounds that it was made very late and the reasons for such a request were not compelling.
In respect of whether the taxpayer was entitled to postpone the tax due, the tribunal cited the taxpayer’s poor compliance record. The tribunal also commented that the taxpayer owes tax in respect of the payments made regardless of whether these payments are found to relate to income from employment or self employment.
The taxpayer’s appeal against HMRC’s refusal to postpone the tax due was dismissed.