My client was a director of a company that ran a car dealership. The company went out of business with unremitted GST. The CRA wrote to him to propose assessing him as director for its GST liability.
I wrote a lengthy letter to the CRA official with evidence to show that the underlying assessment was incorrect. I showed that the GST returns prepared during the receivership were not authorized by the director and the figures on those returns were wrong.
I also explained to the CRA that my client met the "due diligence" test. He had always tried to have the company comply with its tax obligations, but while it was in interim receivership some of its GST remittances were not made, even though the receiver had prepared cash flow projections showing that these amounts would be paid. The receiver actually took over the company a few days after the planned receivership date, so that my client inadvertently still had control of the company on a due date when the receiver should have been handling remittances. I also showed that if the GST remittance had been made, that would have been a "fraudulent preference" of the CRA over other creditors, as determined by the case law. I backed up my submissions with extensive documentary evidence.
The CRA agreed, and withdrew its proposal to assess my client.