HMRC have got new powers to make directors and shareholders joint and severally liable to a company’s debts due to HMRC. This will give directors and shareholder personal liability for HMRC debt. The new powers were granted in the Finance Act 2020, schedule 13 and allow HMRC to give notice to a director or shareholder that will have personal liability for HMRC debts.
These are the circumstances where such a notice by HMRC could make a director or shareholder personally liable for HMRC debt
Tax avoidance and tax evasion cases
Where a company
- has entered into a tax avoidance arrangement or is engaged in tax-evasive conduct (which means giving deliberately inaccurate returns or claim or failing to comply with certain obligations) and,
- that company has gone into an insolvency process or is at serious risk of going into a process,
- then any person that was responsible for the company entering into the tax avoidance or evasion or received a benefit from it at a time that they were a director or shareholder could be served a notice.
- The notice will detail what taxes and the amount that the director or shareholder must pay. It is immediately due and payable and there are limited rights of appeal.
Repeated insolvency and non-payment cases
If at least 2 companies that a director or shareholder has been connected with within a 5 year period and the companies had outstanding tax liabilities or the companies failed to submit relevant returns or make a declaration and a subsequent trading company carries on a similar trade then HMRC may issue a notice requiring a director or shareholder to pay the new company’s HMRC debt personally as well as the old company.
Personal liability notice (PLN) for unpaid National Insurance
In addition to the new powers above, HMRC already has powers to issue a PLN for unpaid National Insurance contributions where HMRC believe there is an intention to fail to pay National insurance.
This measure together with a return to preferential status to HMRC debts from December 2020 shows that HMRC is looking to recover more unpaid debt.
If you are worried about personal liability for HMRC debts then please contact us now and we can help you understand the options available.
