Liability to an excise civil evasion penalty: elements to liability to a civil evasion penalty
Person liable to a civil evasion penalty
The elements that must be proved to establish a liability to a civil evasion penalty under S8 of Finance Act 1994 are that:
- a person engages in any conduct
- the purpose of that conduct was to evade any duty of excise
- the person’s conduct in connection with the act or omission involved dishonesty.
For the purposes of this section the meaning of:
- ‘conduct’ includes any act, omission or statement
‘evade any duty of excise’ includes obtaining or securing without being entitled to it:
- any repayment, rebate or drawback of duty
- any relief or exemption from any allowance against duty
- any deferral or other postponement of liability to pay any duty or of the discharge by payment of such liability
- the failure to cancel any entitlement to, or the withdrawal of, any such repayment, rebate, drawback, relief, exemption or allowance.
In accordance with the Interpretation Act 1978 a ‘person’ includes:
- an individual
- a body of corporate persons
- a body of unincorporated persons.
Note: It is HMRC’s policy not to issue an excise civil evasion penalty against deceased persons.
Common Law Partnerships
In the case of common law partnerships, a dishonest partner usually binds the whole partnership to liability to a civil evasion penalty. It is the partnership, therefore, that is generally assessed the penalty - not just the dishonest partner or partners. The partners in the partnership will be jointly and severally liable to pay the penalty.
Limited companies that have been dissolved and struck off the register of companies at Companies House are no longer in existence and can have no liability to an s8 penalty.
However, where a company is in liquidation it is not excluded automatically from liability to a civil evasion penalty. In order to maintain this position, in cases where a company has already gone into liquidation at the outset of our compliance check, or is liquidated during the course of the check, it is essential that you monitor the position with the insolvency practitioner to ensure that the penalty notices are served (via the insolvency practitioner) before the company is struck off. Prior to a company being dissolved, HMRC can object to its dissolution by applying to the Dissolution Unit, Companies House, Crown Way, Maindy, Cardiff, CF4 3UZ, setting out in writing the grounds for the objection. Companies House will inform HMRC in writing whether or not they have suspended their action. The objection must be made before the company is dissolved, as once dissolved removal from the register is automatic.
In order to pursue civil offence action against a limited company that has been struck off (for the purpose of recovering the penalty debt from the dishonest former directors and or managing officers) the company would first have to be reinstated to the Register of Companies. This process is complex and costly and should only be considered in exceptional circumstances.