Another interesting tax case of recent months. A director of a company, a leading and highly paid car designer, left the administration of his company to his wife. His wife left him, and pretty much simultaneously HMRC pointed out that the amount of income declared in his company's tax returns didn't appear to match up to what their sources suggested had really happened.
It seems to have been undisputed that his now estranged wife had been spiriting money out of the company. HMRC wanted to tax the amounts based upon the idea that it was a loan or a dividend to the director, and the fact that his wife had disappeared with the cash was something to be resolved between him and his wife. The car designer argued that he'd made appropriate arrangements to have this company's affairs adequately looked after, and the missing money wasn't his fault.
The car designer lost.
The tribunal was clear that, as the sole director, the buck stopped with him. Although he may have been unfortunate, he should have had sufficient knowledge of his company's affairs to be reasonably sure that the public purse wasn't being defrauded on what was a fairly massive scale - the "missing" profits were around £123,000. The moral of the story is clear. If you've a business, it's your responsibility to have a basic knowledge of what's going in it - and if you don't have that, you need to be aware you're running a risk.
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