Personal Risk of Not Paying Tax

The non-payment of Tax and National Insurance Contributions due to HMRC is a grave public interest concern as the state and society relies on all companies and businesses paying their tax obligations. Amongst the many areas for which government use taxes (which is not an exhaustive list) are education, defence and public protection, government administration and services, transport, economic growth, housing, recreation, sport and culture and various benefits provided to the poor and disabled.

Due to its complexity and the number of taxable entities, Tax is partially self-regulating.  Whether you are a company or an individual, you have a legal obligation to ensure that all returns are filed accurately and on time, and payment of the taxes due on such returns are also made within the statutory time period thereafter.

HMRC Powers

However, if such self-regulation does not work then HMRC will ordinarily assess taxes and seek to wind-up your company or bankrupt you on the basis of any unpaid returns or their statutory assessment of you or your company’s tax liabilities.  Where evidence or suspicion exists of undisclosed tax liabilities, HMRC has the power to instigate Code 9 investigations which can ultimately lead to such taxes and penalties being accepted or a criminal prosecution being commenced. 

Whilst HMRC do have a policy of rigorous enforcement of unpaid tax liabilities, they will listen to proposals and agree any reasonable Time to Pay Agreements.  However, if such negotiations are not initiated or such Time to Pay Agreements are not entered into (or you default under such arrangements) then HMRC will almost certainly proceed to enforce their debt with a view to limiting the escalation of such indebtedness and seek the appropriate Order from the Court.

We discuss the powers of enforcement HMRC have here and further the options you have are discussed here

However, where such options are exhausted or no such remedial action is adopted, then individuals and directors of companies face considerable risks not just to their business, but also personally, once enforcement has taken place.  These include the following:

  1. Personal Liability Notices – PAYE/NI
  2. Accelerated Payment Notices
  3. Director Disqualification Claims
  4. Compensation Order Claims
  5. Claims by Liquidator
  6. Bankruptcy
  7. Prosecution and Code 9

For directors, we strongly recommend you visit our page which deals more comprehensively with claims against directors here.

For individuals we strongly recommend you visit our page which deals with personal insolvency advice which can be found here.

At Francis Wilks & Jones we are able to assist and advise on all such risks or, if you face such problems, how best to mitigate your personal exposure in advance and protect your company or your business following difficulties with HMRC, including defending any of the proceedings as described above.

Please call any member of our Tax Disputes Team for your consultation now on 0207 841 0390. Alternatively email us with your enquiry at info@franciswilksandjones.co.uk and we will call you back at a time convenient for you.