When silence costs millions – Ignoring HMRC is a risk you cannot afford

Most directors do not expect to face personal tax bills in the millions.

However, that is exactly what happened in a recent case involving a Yorkshire businessman, John Firth, who saw his appeal struck out after failing to engage properly with HM Revenue & Customs (HMRC) and the tax tribunal for almost a decade.

The details of the case are complex. Two liquidated companies, £7.4 million in unpaid VAT, and years of medical excuses.

Despite these complexities, this case is a clear example that delay, silence and incomplete responses do not help when you are under HMRC’s spotlight.

If anything, they make your position harder to defend.

The cost of not responding

Firth was issued with Personal Liability Notices (PLNs) after his companies collapsed with unpaid VAT linked to Kittel fraud, a type of tax avoidance where businesses are found to have benefited from fraudulent supply chains.

The companies did not appeal, so HMRC turned its attention to Firth personally.

Rather than tackling the issue head-on, Firth delayed the process repeatedly.

He cited serious medical problems, shared incomplete evidence, and at times responded only to the tribunal, not to HMRC.

Eventually, after years of deferrals and adjournments, the tribunal lost patience.

In January 2025, the appeal was dismissed outright. Not because of the strength of the tax case, but because the tribunal concluded Firth had failed to cooperate to the extent that a fair hearing was no longer possible.

It is a rare move for a tribunal to strike out an appeal of this size.

However, it shows how much importance is placed on cooperation, and how costly the consequences can be when it is lacking.

When company debts become your problem

When a business goes into liquidation owing tax, directors often assume that the liability ends there.

That is not always true. If HMRC believes the unpaid tax was due to dishonest or careless conduct, they can pursue the individuals involved.

Personal Liability Notices are not issued lightly, but once they are, the focus shifts from the company to you.

That means the standard of response, evidence and communication needs to rise accordingly.

Silence, disorganisation or late replies are unlikely to be viewed sympathetically.

Delays do not buy time, they waste it

Firth’s approach stretched the process out over nearly eight years.

It did not reduce the liability, and it did not improve his position.

The stress, legal burden and financial pressure only deepened.

In the end, the outcome was no better than it would have been had he taken professional advice early and engaged clearly.

What you should do if you are in HMRC’s firing line

If you have received correspondence from HMRC about suspected VAT fraud, unpaid tax, or personal liability, or if you are unsure whether past decisions may come back to you, start with these steps:

• Take any HMRC notice seriously, especially if it relates to personal liability or VAT errors.
• Do not delay your response, missing deadlines can limit your options.
• Be transparent. Incomplete or selective communication only damages credibility.
• Keep records in order. Good documentation can make the difference between suspicion and resolution.

Tax disputes are never pleasant, but silence is not a defence.

As Firth’s case shows, failing to engage can cost you everything.

You may not be able to control the investigation, but you can control how well prepared you are for it.

If you are facing pressure from HMRC, or worried that your business decisions could have personal consequences, get proper advice from our team today.