HomeSMEs, directors & shareholdersTax disputesPersonal liability notices for businesses

Personal liability notices can be very serious for business owners and those involved in management. It is a way for HMRC to recover unpaid NIC and VAT. Our team has successfully defended numerous PLN claims. Let us help you too.

What is a personal liability notice?

A personal liability notice is a notice issued to an individual transferring a company’s liability for unpaid National Insurance Contributions and VAT, where the individual is alleged to have been responsible for the non-payment. It can only be issued for unpaid PAYE – it cannot be used for recovering Corporation Tax or any other taxes. It derives from quite old legislation – Section 121C of the Social Security Administration Act 1992 (SSAA 1992).

How much can be claimed?

The personal liability notice will add interest and the amounts requested are often significant.

  • The amount claimed is likely to have been calculated based on the unpaid National Insurance Contributions of all company employees or the VAT unpaid and not just on the income of the individual in receipt of the notice.
  • Additionally, the sum claimed by HMRC can be further inflated where the company is considered liable for NICs for any contractors falling within HMRC’s rules on IR35.

Who is liable to pay a personal liability notice?

The following can be served with a personal liability notice

  • The named directors of the company
  • Anyone who acted in the management of the company’s affairs and this can include the shareholders on smaller companies.
  • Individuals who act as a directors without officially having been appointed as directors, a role commonly referred to as de facto directors. 

What if you cannot pay a personal liability notice?

Given the significant sums that a personal liability notice can request, it is important that early advice is taken regarding the options available, the risks and steps that can be taken to mitigate those risks. It is sometimes possible to negotiate the amount down, negotiate a payment plan or seek financing from elsewhere.

Whatever you do – do not ignore the PLN. Otherwise you could end up going bankrupt.

Notification of an intention to issue a personal liability notice.

Usually, you will receive an extensive letter from HMRC’s Fraud Investigation Service with enquiries before any decision to impose a personal liability notice is made. 

Such enquiries will deal with;

  • the company’s failure to pay NIC and VAT liabilities;
  • the periods of time HMRC is concerned with;
  • the amounts unpaid;
  • the evidence of the recipient acting in the management of the company;
  • any history of previous companies which show similar patterns of behaviour and what part of the liability is attributed to that individual.

This letter will provide an opportunity to provide representations on the evidence provided and why you say that the company’s National Insurance Contributions and/or VAT have not been paid. Where HMRC accept these reasons, then a personal liability notice will not be issued. It is therefore vital that upon receipt of notification of an intention to issue a notice, legal advice is immediately sought.

How we can help

Our tax defence team is led by accountant and Partner Stephen Downie and assisted by Partner Andy Lynch who also spent 18 years working for the investigations team at HMRC.

We have defended numerous PLN claims and settled many others. We can help you too.

“FWJ did precisely what it set out to do. I am extremely grateful for its assistance.”

A client who had received a Request for Security from HMRC for a sum that would have caused their company severe financial difficulties. We helped them to have the entire bill withdrawn

At Francis Wilks & Jones we have considerable experience of assisting directors and business owners faced with a personal liability notice and associated claims, such as bankruptcy petitions by HMRC or attempts to obtain a directors disqualification order. Don’t settle for second best. Contact our expert team of tax disputes solicitors today and we can help.

Key contacts

Phoebe Pexton

Phoebe Pexton

Solicitor

Andy Lynch

Andy Lynch

Partner

Stephen Downie

Stephen Downie

Partner

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