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Directors who are liable for unpaid tax

2 May 2024

HMRC has the power to make directors personally liable for paying the tax debts of companies they have been involved in under certain limited circumstances. This can also apply to certain other individuals associated with a company. A joint and

HMRC has the power to make directors personally liable for paying the tax debts of companies they have been involved in under certain limited circumstances. This can also apply to certain other individuals associated with a company.

A joint and several liability notice tells the recipient that they are personally responsible, along with the company and anyone else issued with a notice, to pay the penalty amount raised against the company.

There are a number of important conditions that must be met before HMRC can issue a notice. The underlying legislation applies to liabilities relating to any period that ended on or after 22 July 2020.

Directors could receive a joint and several liability notice in cases of:

  • tax avoidance and tax evasion;
  • repeated insolvency and non-payment cases; and
  • facilitating avoidance or evasion, for example, helping others to avoid or evade paying tax due.

HMRC doesn’t lightly issue a joint and several liability notice. They investigate the company’s financial activities thoroughly. They also assess the role of directors or associated individuals. If HMRC issues a notice, it means they found strong evidence. The evidence is of the individual’s involvement in tax evasion, repeated insolvency, or facilitation of such activities. So, companies and directors should stay transparent and comply with tax laws. This way, they can avoid severe implications and prevent such notices.

Source: Other Tue, 30 Apr 2024 00:00:00 +0100

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