When is someone a Company Director and a Company Officer Part 3?
Mr Malik – the “Pizza worker” contended that the lead role at the meeting had come about because he was instructed to lead by Mr Munaim.
He denied any admission of responsibility for company financial affairs. He attributed his detailed knowledge of the cash reconciliation and ordering to his position as a long-serving employee – his ability to estimate takings likewise. He had no explanation other than long service as to why his name should have be used as a contact, or on a letter.
He also produced a letter, written after the company had been struck off, from Mr Munaim to the effect that he was only an employee with no significant control or influence on the business.
Correspondence from the accountants stated that Mr Malik was an employee, and that they dealt with Mr Munaim in regard to accounting and payroll.
Mr Malik maintained that his role in cashing up arose because he was usually on the premises until the shop closed, and that if he was not, the job would be done by other employees. In oral evidence, he denied having any role in preparing the diary of payments given to HMRC.
He ‘was adamant that he was not a directing mind or controlling person in relation to the business and in particular that he did not instruct Mr Munaim what to do and that Mr Munaim did not act in accordance with (his) instructions or directions.’
A Worker, a Manager and a Director
The Tribunal lent towards HMRC’s opinion. It found, on the balance of probabilities, that Mr Malik was a manager of the pizza business. In reaching the conclusion, it also looked at the surrounding circumstances: that Mr Malik was a director of the first two companies operating the pizza franchise at that address, and directed another pizza business concurrently.
It therefore considered that ‘given his experience and seniority’ it was more likely that he was in a managerial position rather than being an employee limited to taking orders, cooking and delivering pizzas. It also instanced the ‘relatively small points’ of being named on correspondence and used as a contact for the business.
Part of the digital data revolution at HMRC, which includes MTD for VAT, is the use of big data analytics in tax compliance. HMRC, with its massive data pool, will increasingly be able to spot trends which may be invisible to agents.
This has far reaching consequences. HMRC are able to attach clients to advisers, see which businesses have been operating from which premises, and who has been involved.
Please talk to us at ESB Accountancy to discuss how your business can comply with the new laws – with several decades of financial experience here in Gloucestershire you can either ring us now on – email us on firstname.lastname@example.org or click the Contact Us buttonor please fill the form at the bottom of the contact us page.