The enquiry is seeking to transfer the NIC liabilities of the company (now in liquidation) to the former director, as he did not have sufficient involvement as the director in ensuring that HMRC were paid. They are making use of a Personal Liability Notices (PLN) for National insurance and have yet to make the decision, so the question for FITS is can we help him in this action.

Background to PLN’s

In the last couple of years HMRC has been seeking to increase the number of Personal Liability Notices being issued. If a company director receives an HMRC Personal Liability Notice, then HMRC will have good reason to believe that the officer of the company committed some serious and intentional failure to pay National Contributions (NIC) owed by that company. As it is only when HMRC believes that this was an intentional attempt to commit fraud or some other serious offense, that they will pursue that company’s officer/director, and they are starting to do this to the full extent of the law.

A PLN can breach the corporate protection of a limited company and make an individual liable for company tax debts. Interestingly, the individual concerned need not be a director, as is commonly thought, but can be an employee in a position of control over the relevant tax, or even a shadow director. It should also be noted that, it is not only directors of phoenix companies who can receive a Personal Liability Notice. Current directors who have a history of Phoenixing and pose a current risk may also receive a notice if national insurance contributions are not being paid timely.

During an HMRC Personal Liability Notice enquiry, HMRC will:

  • Examine the company’s books and records, either at the company’s business premises, at the agents or even at the insolvency professionals;
  • Invite representations from the company’s officers to explain why the failure to pay took place;
  • Determine the facts and circumstances surrounding the failure to pay to establish grounds on which to issue a Personal Liability Notice;
  • Consider the extent of the neglect on the part of each of the company’s officers;
  • Seek to ‘fairly’ and ‘reasonably’ apportion the debt between company officers relative to the part each played in the negligence or fraud;
  • Consider and respond to representations from the company’s officers with respect to the underpayment of National Insurance contributions.

Once they have this, they are very likely to make an initial decision on whether to proceed or close the enquiry. If they choose to proceed, then given that they claim to have not lost a case yet, professional advice should be taken every time.

Once again, an area where we can offer to help, mitigate the issues for you.