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HMRC Claims Against Company Directors
Company directors are not generally liable for a company’s debts; however, HMRC is a special type of creditor. The government department responsible for the collection of taxes has statutory powers to claim a company’s tax liabilities against a director personally, including loan charges, VAT security deposits and National Insurance contributions (NIC).
JMW can provide advice in relation to these claims, and assist with any dispute with HMRC. Any director subjected to joint liability notices (JLNs), personal liability notices (PLNs), or facing claims brought by HMRC should act quickly in order to increase their chances of settlement.
How JMW Can Help
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 unregistered directors, being jointly and severally liable for the company’s tax liabilities.
The team at JMW advise directors on their rights and options when a HMRC claim has been brought against them. We regularly defend directors in relation to proceedings brought by officeholders or government authorities.
Our team includes an experienced licensed insolvency practitioner and we regularly work with other professional firms, both large and boutique, so we can tailor the level of service and costs to the client’s needs.
Types of HMRC Claims
Joint Liability Notices (JLNs)
In certain instances, HMRC may issue JLNs, making directors personally liable for the company’s tax liabilities. However, directors are able to appeal against a JLN and should seek legal advice immediately upon receipt of this type of notice.
Personal Liability Notices (PLNs)
PLNs can be issued to directors who HMRC believes are abusing the insolvency process in order to avoid paying taxes and debts. Representations can be made to HMRC before a PLN is issued, allowing negotiations to take place and an opportunity to settle on the grounds that the director was not negligent or fraudulent.
Once a 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. This is a complex and ever-developing area of law, so it is vital that directors seek specialist legal advice at the earliest opportunity.