Tribunal Rejects Director’s £113,000 Appeal in High-Stakes HMRC Case
A recent tribunal case between Ghenadie Bejan and HMRC has set a precedent, addressing both compliance and communication hurdles in tax law. Bejan, a former director of Kronstadt Contractors Ltd, appealed a personal liability notice (PLN) issued by HMRC for £113,148, accusing him of deliberately inaccurate VAT reporting.
His defence hinged on alleged postal issues and his limited English proficiency, raising concerns about notification adequacy and fair representation.
Background and Timeline
The dispute began in 2021 when HMRC investigated Kronstadt's VAT records, finding a discrepancy they attributed to Bejan.
Despite closing the company, HMRC pursued Bejan directly, leveraging the Finance Act 2007's Paragraph 19, Schedule 24, which allows HMRC to hold company officers personally liable for penalties if the officer's conduct contributed to tax discrepancies. When Bejan did not respond within the statutory 30-day appeal period, HMRC initiated recovery efforts, including a potential bankruptcy.
Key Issues Raised in the Tribunal
Bejan’s appeal argued that he was never properly notified about the PLN, citing language barriers and missing mail as factors that compromised his right to appeal within the given timeframe.
According to Bejan, he did not understand English and only learned of the PLN through enforcement actions in 2022. Represented by Lexlaw, Bejan insisted on the importance of receiving official documents in a language he could comprehend, claiming HMRC’s failure to do so infringed on his rights under Article 6 of the European Convention on Human Rights (ECHR).
However, the tribunal determined that HMRC’s approach was lawful. The judgment emphasized that HMRC is not obligated to provide translations unless a taxpayer explicitly requests assistance.
As Bejan did not notify HMRC of his language limitations until his appeal, the tribunal ruled that HMRC could assume he understood their correspondence.
The Tribunal’s Verdict and Its Implications
Tribunal Judge Mark Baldwin and Mr. Julian Stafford ruled in favour of HMRC, stating that Bejan had been duly notified under legal standards, and the time to appeal had expired.
The tribunal upheld the integrity of HMRC’s postal system, noting that Bejan provided no evidence of specific postal disruptions that would exempt him from notification requirements.
Furthermore, the judge dismissed the assertion that Bejan’s inability to read English constituted grounds for appeal, arguing that a taxpayer's responsibility includes seeking translation when needed.
Wider Impact and Controversies
This case sheds light on issues concerning the accessibility of tax compliance processes for non-English-speaking directors and the limitations of leniency in cases of claimed misunderstanding.
While HMRC welcomed the ruling as a validation of their procedures, it has also highlighted potential gaps in support for directors who may face similar barriers.
For UK business leaders, this case underscores the importance of ensuring clear communication with HMRC and addressing any potential language or comprehension issues proactively.