Repeat offenders: HMRC to make them personally liable

For those encountering a number of insolvencies the Finance Act 2020 has introduced provisions to pin company directors with personal liability for the company tax debts on the basis that are using the insolvency process to avoid paying their taxes.


The conditions that HMRC can put you on notice for this are as follows:

  • In the last 5 years the individual had a relevant connection to at least 2 old companies that were subject to an insolvency procedure and had a tax liability
  • A new company is or had been carrying on a similar trade to any of the older companies
  • The individual has a relevant connection to the new company
  • The relevant old companies have a tax liability of more than £10,000 that is more than 50% of the total amount of those companies liabilities to their unsecured creditors.


Where HMRC gives a joint and several liability notice, the individual is jointly and severally liable with the new company (along with any other individual that has given notice) for both of the following:


  • Any unpaid tax liability of the new company which is unpaid on the date the notice was given
  • Any tax liability of the new company that arises during the period of five years beginning with the date the notice is given and while the notice still has effect

There are time limitations to enable HMRC to pursue this, which means they only have 2 years from the date they became aware the conditions for a notice to be served had been met.

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