Purple Sunset Limited v The Commissioners for HMRC
Decision date: 28 July 2023
Neutral citation: [2023] UKFTT 659 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Purple Sunset Ltd, a company with a sole director/shareholder Mr McDonald, failed to file RTI returns or pay NICs for payments to him. The First-tier Tribunal held that directors are office-holders treated as "employees" under ITEPA and the PAYE Regulations, so the company was required to make RTI returns, and rejected the company's claimed reasonable excuses. The appeal against RTI penalties was dismissed and the penalties confirmed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where statute (ITEPA) treats office‑holders, including directors, as "employees" for employment income provisions and the PAYE Regulations adopt those statutory meanings, an employer is required to comply with RTI/PAYE obligations in respect of such directors; further, a taxpayer’s failure to seek available guidance or advice may render ignorance of RTI obligations an unreasonable excuse for non‑filing.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal suggested that reliance on an adviser will seldom amount to a reasonable excuse where the principal did not take reasonable care to avoid the failure. It also noted that the concessionary annual RTI provision for 2015–16 (Reg 67B(1A)) depends on the employer having an HMRC PAYE reference and is irrelevant where no reference was issued.