What Tax Types Can Be Affected by a Personal Liability Notice?
HMRC are only permitted to pursue unpaid company National Insurance Contributions through Personal Liability Notices. They are also permitted to pursue any late payment interest and penalties arising from those unpaid NICs though Personal Liability Notices.
The legislation enabling the use of Personal Liability Notices (The Social Security Administration Act 1992) is very specific that only National Insurance Contributions that should have been paid by the company to HMRC but have not are capable of being pursued through a Personal Liability Notice. The legislation applies to unpaid National Insurance Contributions that arose after 6 April 1999.
The legislation is so tightly restricted to National Insurance Contributions because the power that it gives to HMRC is a big step beyond what they are normally permitted to do. HMRC’s ability to pursue corporate liabilities directly from directors or other officers of the company goes against the limited liability status normally associated with a limited company. The standard position is that a company’s officers or shareholders cannot be pursued personally for company debts, which is exactly what a Personal Liability Notice is set up to do.
You may ask why Personal Liability Notices can be issued about National Insurance Contributions and not other taxes? One of the reasons is that the government takes a very dim view of companies who do not pay their National Insurance Contributions. Companies are under a statutory obligation to deduct National Insurance from employees’ PAYE and to then not pay the money deducted, or the NICs due from the company itself is viewed as theft from the public purse.
Personal Liability Notices are very onerous, as they don’t only relate to the unpaid National Insurance Contributions of the particular officer to whom they are issued, but can be for all of the unpaid National Insurance Contributions due from the company.
That’s not to say that HMRC will use a Personal Liability Notice to collect from directors or other officers in every situation where a company has not paid National Insurance Contributions. They’re only permitted to do so in cases where they can establish that there has been deliberate misconduct or substantial negligence on the part of the relevant officers.
HMRC take this responsibility very seriously, and the team who deal with issuing Personal Liability Notices have to follow very stringent guidelines about when it might be appropriate to issue the notice. Personal Liability Notices are only issued in very serious cases because of the onerous obligations they impose.
Need Personal Liability Notice Advice?
For free, confidential tax problems and debt advice as well as personal liability notices and help with your current situation, please contact us on 08000 746 757; or you can call Sue Collins directly on 07949 969 006. You can also speak to one of our advisors by using the live chat button on the bottom right-hand corner of the screen. We have experience dealing with Personal Liability Notices – contact us today for a no-obligation discussion.
Author: Mike Smith