A director of a haulage company is being held liable for nearly €730,000 in unpaid payroll tax and VAT. He claims that he gave timely notice of his inability to pay. However, the court ruled that this was not the case. The application for a COVID-19 payment deferral was submitted on the basis of an incorrect reason. Furthermore, there is evidence of manifestly improper management. Whilst the tax debts were mounting, the director received over €470,000 from group companies without it being clear what this was for.
Strong growth, no tax paid
The transport company was founded in August 2020 and is growing rapidly. Turnover rose from €1.5 million in 2020 to nearly €9 million in 2023. At the same time, substantial amounts of payroll tax and VAT remain unpaid. In January 2022, the company applied for a COVID-19 deferral due to a decline in orders. The Tax and Customs Administration granted this deferral but later revoked it because insufficient explanation was provided regarding the link to the pandemic.
Coronavirus postponement on the wrong grounds
The director argues that the request for a COVID-19 payment deferral constitutes a declaration of inability to pay. The court rejects this argument. The reason given appears to be incorrect in light of the strong growth in turnover. Consequently, the request does not constitute a valid declaration. A subsequent request for a payment arrangement dated 1 May 2023 is regarded as a declaration, but this is only timely for the months of February and March 2023.
A director who is not acting reasonably
The director remains liable for these months as well. The court ruled that there was a case of manifestly improper management. The director was aware of the tax debts and received several statements regarding them. Nevertheless, tax returns were either not submitted at all or were filed late, and the debts continued to mount. At the same time, €3.8 million is transferred to affiliated companies. According to the director, these payments are necessary for the group’s continuity, but a large proportion of the money ultimately ends up in his own hands.
Over four tonnes with no explanation
Over a period of three years, the director received €723,567 into his personal account from group companies. Of this amount, €253,108 was net salary. He has provided no explanation for the remaining amount of €470,459. Nor do the bank statements reveal the purpose for which these sums were paid. The court considers it plausible that a large proportion of this amount originated indirectly from the haulage company and classifies these payments as non-business-related.
Non-existent case law
It is striking that the court disregards part of the appeal. It contains several erroneous and non-existent references to case law. The court disregards the arguments based on these references. The pattern of non-existent judgements with plausible-sounding citations is reminiscent of AI hallucinations. The court does not say so in so many words, but the message is clear: check your sources.