Company directors are generally NOT liable for a company’s debts.
HMRC is a special type of creditor. It is the government department responsible for the collection of taxes and they have statutory powers to claim a company’s tax liabilities against a director personally, including loan charges, VAT security deposits and National Insurance contributions (NIC).
We can point you in the right direction and provide guidance relating to these claims, and help you deal with any investigations and dispute with HMRC. If you have been subjected to joint liability notices , personal liability notices , or facing claims brought by HMRC then it is very important to act quickly as this will increase your chances in agreeing a settlement.
Any suggestion that a company has been involved in tax avoidance, evasion or phoenixism may, in certain circumstances where there is a risk of a company facing insolvency, potentially result in the directors, including shadow directors, being jointly and severally liable for the company’s tax liabilities.
We advise directors on their rights and options when a HMRC claim has been brought against them. We regularly provide assistance to directors in defending the proceedings brought by officeholders ( Insolvency Practitioners ) who have been appointed to deal with the insolvency of the company or government authorities.
Potential claims HMRC
Joint Liability Notices – In certain instances, HMRC may issue a Joint Liability Notice (JLNs) , making directors personally liable for the company’s tax liabilities. However, directors can appeal and should take immediate advice when they receive this type of notice.
Personal Liability Notices – Can be issued to directors who HMRC believes are abusing the insolvency process to avoid paying taxes and debts. Representations can be made to HMRC before the notice is issued so that negotiations can take place and an opportunity to settle on the grounds that the director was not negligent or fraudulent.After the PLN has been issued, directors will be personally liable for NIC, interest and/or penalties. The only way to appeal an issued PLN is to bring a case before the Tax Tribunal.
Demands for Repayment Following Remuneration
HMRC has taken a strong stance in relation to disguised remuneration schemes in the last few years, with loan charge legislation coming into effect on 5th April 2020 (but with effect retrospectively from 5th April 2019).
Company directors found to have participated in a disguised remuneration scheme may face HMRC demands for repayment of tax, and may risk personal liability.
The legislation around the JLN , PLN and loan schemes is complex and so immediate advice should be taken .
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