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Equitable liability: an example, too

21 July 2009
Issue: 4215 / Categories: Forum & Feedback , equitable liability
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The client concerned was faced with threats of bankruptcy over alleged tax debts.

The client’s last completed tax return was for the year ended 5 April 1993 and HMRC had raised estimated income tax and Class 4 National Insurance contribution assessments for 1994/95 and 1995/96.

These assessments had not been appealed and the Collector of Taxes had pursued the debts to the point of threatening distraint at which point the client had paid the tax and NIC using money borrowed from relatives.

In the absence of completed self-assessment returns for years ended 5 April 1997 to 5 April 2000 HMRC determined the client’s self assessment and imposed interest and surcharges.

The determinations broadly estimated the client’s earnings at the level of the 1995/96 assessments uplifted by 50% each year.

Although the client made some payments against these determinations using earnings and further money borrowed from relatives the...

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