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Company Unpaid NICs – Company Directors Liable

A company called L Wear Limited went into administration in March 2007 owing HMRC £321,307 in unpaid NICs.  Under Section 121C of the Social Security Administration Act 1992  HMRC are allowed to issue personal liability notices (PLNs) when a company has failed to pay NI contributions and that failure is “attributable to the fraud or neglect of one or more individuals who were, at the time of the fraud or neglect, officers of the company” .

The HMRC duly issued a PLN against the Finance Director, Mr O’Rorke.   He appealed the PLN claiming that he had been suffering from an addiction which affected his behaviour.  The Tribunal found that the state of mind of the individual forms an essential ingredient of assessing liability.

This  means that even if company directors do not consciously act negligently they could still be held personally liable for  unpaid NICs.    However, this is not the end of the case, so it will be interesting to see how things progress.

The Cost of Travelling from Home to Work

For the taxpayer, generally the cost of travelling from home to work is not an allowable expense.   Carrying on significant business activities at home does not necessarily mean that travel between home and another place where business is conducted is allowable.   It is useful to establish where the business is carried out.   It is normally clear cut if the taxpayer owns or rents business premises.    However there are some types of business where the taxpayer has no office away from their business but visits clients away from their residence which is normally allowable.   In the case of Newsom v Robertson (BIM37605), a barrister worked partly at his chambers and partly at his home.   This case highlights how the business base needs to be established in each individual situation.

BIM37620 makes specific reference to the ‘itinerant’ trader.  An itinerant trader travels from their home to a number of different locations to complete a job of work, after which, they attend a different location.   Their base of operations is at their residence therefore costs of travelling between the residence and the sites at which the trader works is normally allowable.   A typical example would be a jobbing builder.

Further to the ‘itinerant’ trader, it is also worth reading  BIM3765 which references a case of travel costs from home to business in the case of a milkman who chooses to reside away from his round.