Can I be made Personally Liable with a Security Bond?
If HMRC becomes concerned that bills will not be settled on time, they may request a security deposit (known as a ‘bond’) in the form of cash or via a guarantee from an approved financial institution. Depending on their perception of the level of risk, it is within their rights to attach Joint and Several Liability (JSL) to the security bond, meaning that if a company does not comply the director(s) may be made personally liable.
Director’s Personal Liability in Insolvency
Once relatively rare, there is evidence to suggest that HMRC is beginning to use Joint and Several Liability notices more frequently to secure tax payments. The idea of a Joint and Several Liability is that it ‘pierces the corporate veil’, meaning that the limited liability usually enjoyed by officers of a ‘Limited’ company is swept away. Joint and Several Liability notices can be issued for VAT, PAYE or NIC payments, as well as bolted on to Winding up Petitions or Security Bonds. HMRC would only issue a Joint and Several Liability notice if they had reasonable expectations of its efficacy to recoup them money.
Multiple Individuals can be made Jointly and Severally Liable
In certain cases, multiple individuals will be named on a Joint and Several Liability notice, making them all personally liable for a particular debt. As with all Joint and Several Liability notices, any breach is considered a criminal offence so if you receive one, it would be wise to take professional advice immediately. Call one of our team on 08000 746 757 if you would like confidential advice on your situation.