A “PLN” notice can be issued, where in the opinion of HMRC, there is sufficient evidence to show ‘on the balance of probabilities’ that the company failure to pay the National Insurance contributions due was attributable to the neglect of fraud of an individual who was an ‘officer’ of the company at the time of the failure.
The right of recovery by personal liability notice includes all Contributions payable by the company for both the directors and the employees and includes:
▪ Employers and employee National Insurance contributions
▪ Class 1A & Class 1B National Insurance contributions
▪ Interest in respect of National Insurance contributions
▪ Penalties in respect of National Insurance contributions
Any individual issued with a personal liability notice becomes personally liable for the company National Insurance Contributions debt specified in the notice.
A specialist team based at HMRC in London carries out investigations and has responsibility for the issue of Personal Liability Notices.
A PLN can only be issued when a company has failed to pay National Insurance Contributions and that failure is, in the opinion of HMRC, attributable to the fraud or neglect on the part of an individual who was an officer of the company when the National Insurance Contributions should have been paid.
HMRC will generally only commence personal liability notice enquiries where they have a strong belief that they can recover a significant proportion of the unpaid National Insurance Contributions from one or all of the officers.
An Inspector from HMRC will:
▪ Examine the company books and records.
▪ Invite representations from the officers of the company
▪ Determine the facts and circumstances surrounding the company failure to pay the National Insurance Contributions and consider the extent of the negligence or fraud of each officer in the Company for the personal liability notice.
The officers who are subject to the personal liability notice are:
▪ Company Secretary
▪ A manager of the business as a whole
▪ Shadow directors
HMRC will give full consideration to any representations made by or on behalf of the officers of a company when dealing with or considering a personal liability notice.
We are seeing more and more of these notices being issued or threatened and a strong defence is the only way to go. It can be a long haul to defend such a notice but the potential costs to a director can result in personal bankruptcy if this is not taken seriously from day one!Share