A Personal Liability Notice (“PLN”) may be issued by HMRC in respect of unpaid National Insurance contributions and PAYE. PLNs were introduced some time ago by way of Section 64 of the Social Security Administration Act 1998 and came into force on 6 April 2009. HMRC are now annually issuing greater numbers of PLNs than ever before.
The effect of a PLN is that it effectively transfers the liability for the specified debt from the company to an officer of a company such as a director, company secretary or a shadow director or senior manager.
HMRC will generally only commence a Personal Liability Notice investigation where they believe the lack of payment is attributable to serious neglect or fraud on the part of the director or company officer.
In the context of insolvency, HMRC inspectors will call upon the liquidator or Official Receiver for access to assess the company’s records to see if a PLN can be issued. HMRC will use this information to make a decision as to whether to issue a such a Notice.
A PLN can be challenged at a tax tribunal or prior to this and in many cases can be settled with HMRC. It is important to note that the burden of proof is on the HMRC to show wrongdoing in Darren Cresswell v HMRC [2017] TC06274 the First-Tier Tax Tribunal dismissed a 'hopeless' PLN which was out of time and not backed up by sufficient evidence.
If you have been issued with a Personal Liability Notice or require any advice on this matter, please contact Raheel Khan at Montpelier Solicitors.
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