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HMRC internal manual

Excise Civil Evasion Penalty

Liability to an excise civil evasion penalty: attribution

Generally speaking, as a matter of law, actions of a single individual can be attributed to the company as a whole. This was a matter considered in the case of McNicholas Construction Co Ltd v C&E Commissioners (2000) STC 553.

This case is authority for the proposition that the acts and knowledge of all employees who have a part to play in the making and receiving of supplies may be attributed to the employer company for the purpose of a penalty for dishonest evasion; and that the purpose of the legislation would be seriously undermined if the only persons whose acts and knowledge might be attributable to a company where those responsible for running its affairs. However, there is an exception to the rule quoted in this case: ‘The exception to the general rule of attribution was founded in common sense and justice. The act of an employee should not be attributed to the employer company if, in truth, the act was directed at, and harmful to, the interests of the company’.