The appellant, Prutish Gopaul, appealed against personal liability notices (PLN) for penalties charged for VAT and corporation tax inaccuracies in respect of his company, Gopaul Ltd, which traded as a takeaway pizza business.

HMRC had determined that Gopaul, acting as a director and sole shareholder, had deliberately suppressed sales resulting in inaccuracies in VAT and corporation tax returns.

The tax authority treated the omitted sales as company funds misappropriated by the shareholders, in this case, Gopaul, with a tax liability, known as a section 455 charge, which can arise to a company when a loan is made to one of its shareholders.