Richard and Julie Jones v HMRC

In Richard and Julie Jones v HMRC [2014] UKFTT 1082 (5 December 2014) the FTT held that the reclassification of dividends into salary after their payment did not trigger liability to pay PAYE or NICs.

Mr and Mrs Jones were both directors and shareholders of a company which carried on business as a recruitment agency.

Following the insolvent liquidation of the company HMRC had sought to establish wilful failure to deduct tax and NICs and had attempted to recover those amounts from Mr and Mrs Jones under the Income Tax (PAYE) Regulations SI 2003/2682 reg 72 and the Social Security (Contributions) Regulations SI 2001/1004 reg 86. The first issue was whether Mr and Mrs Jones had known of the failure as they argued that they had received dividends not emoluments. The second issue was whether the dividends had been lawfully paid (on...