HMRC has the power to seek the recovery of National Insurance contributions (NICs) by way of a Personal Liability Notice (PLN) where it believes the non-payment was the result of the fraud or neglect of a company officer. The effect of the PLN is dramatic as it transfers the liability for the company’s unpaid NICs (plus interest charges and late payment penalties) away from the company to one or more company officers personally.
A company officer is:
- A director of the company
- The company secretary
- A shadow director
- Or any manager of the business as a whole
Can Company Shareholders be made Personally Liable?
Personality Liability Notices are issued to those who are responsible for the fraud or neglect that led to the National Insurance contributions not being paid. For that reason, a shareholder of the company who has no involvement in the day-to-day running of a company cannot be made personally liable. However, in many cases, company officers also hold shares in the company and are heavily involved in operating the business. In that case, where NICs are unpaid, a company shareholder, in his or her capacity as a company director, company secretary, shadow director or manager of the business, can be made personally liable for the payment.
How are Personal Liability Notices Issued?
Before a Personal Liability Notice is issued, HMRC will make enquiries of those involved in the management of the company. Although you are not legally obliged to cooperate with the enquiry, HMRC tends not to pursue individuals who have taken reasonable steps to prevent or minimise NIC liabilities.
For that reason, if you are a shareholder and officer of the company and have not been involved in the fraud or neglect that led to the non-payment, you would be wise to cooperate with the enquiry. That could lead to the PLN being withdrawn entirely. If you do fail to respond, other individuals involved in the business may blame you for the unpaid NICs. This could result in you being made solely responsible for the payment.
Have you been threatened with a Personal Liability Notice as the shareholder and officer of a company? Perhaps HMRC has made enquiries and you’re not sure how to respond? Please contact Simon Renshaw today for the immediate, confidential and no-obligation advice you need.