You should read this factsheet if you may be jointly and severally liable for the relevant tax liability of a company that has been involved in tax avoidance or evasion.
We’ll tell you if you’re jointly and severally liable by giving you a joint liability notice. There is more information about joint liability notices in the section ‘What is a joint liability notice’.
Where this factsheet refers to a ‘company’, this could also mean a ‘limited liability partnership’.
Where this factsheet refers to ‘directors’, this means one of the following, a:
director – as set out in section 250 of the Companies Act 2006
shadow director – as set out in section 251 of the Companies Act 2006
participator – as set out in section 454 of the Corporation Tax Act 2010
This factsheet at a glance
This factsheet tells you:
what to do if you need extra support
about joint and several liability
what a joint liability notice is
that we may give you a joint liability notice if certain conditions are met
that if we give you a joint liability notice, you’ll be jointly and severally liable for the relevant tax liability
how we might reduce the amount you are jointly and severally liable for
where to find more guidance on joint and several liability notices
If you need extra support
If you have any health or personal circumstances that may make it difficult for you to deal with us, please let us know. We’ll help you in whatever way we can. For more information about this, go to www.gov.uk and search for ‘get help from HMRC if you need extra support’.
About joint and several liability
Legislation introduced in the Finance Act 2020 aims to deliver fairness across the tax system by:
deterring the use of tax avoidance and tax evasion
influencing the behaviour of those who:
see insolvency as a way of avoiding their tax or penalty liabilities relating to tax avoidance or
tax evasionrepeatedly fail to meet their tax liabilities through insolvency
The purpose of joint and several liability is to make directors of companies jointly and severally liable for the company’s tax liability in certain circumstances.
This includes where repeated insolvency proceedings are used to avoid the payment of relevant
company liabilities.
Where this happens, we may issue a joint liability notice to the individuals that benefited from the tax evasion and avoidance.
What a joint liability notice is
A joint liability notice tells you that you’re jointly and severally liable with a company, and with anyone else that’s been given a joint liability notice, for the relevant tax liability.
Where we give you a joint liability notice for tax avoidance and evasion, the relevant tax liability is the amount of additional tax, penalties and interest due as a result of the company:
entering into tax avoidance arrangements
engaging in tax evasive conduct
Each person receiving a notice is jointly responsible for paying the entire amount due. The amount you are jointly responsible for will be reduced if you’ve paid certain penalties. There is more information about this in the section ‘When the relevant tax liability is reduced’.
Conditions for giving a joint liability notice
An authorised HM Revenue and Customs (HMRC) officer can give a joint liability notice to an individual if all the conditions A to E below have been met. These conditions only apply to the relevant tax liability of a company that has been involved in tax avoidance or evasion.
Condition A
The company has entered into tax-avoidance arrangements or has engaged in tax-evasive conduct.
Condition B
The company is subject to an insolvency procedure, or there is a serious possibility of it becoming subject to an insolvency procedure.
Condition C
At a time when the individual was a director, shadow director or a participator in the company, one of the following applies:
the individual either
was responsible, alone or with others, for the company entering into the tax-avoidance arrangements or engaging in the tax-evasive conduct
received a benefit which, to the individual’s knowledge, arose (wholly or partly) from those arrangements or that conduct
the individual took part in, assisted with or facilitated the tax avoidance arrangements or
tax-evasive conduct
Condition D
There is, or is likely to be, a tax liability relating to the tax-avoidance arrangements or to the tax-evasive conduct.
Condition E
There is a serious possibility that some or all of the relevant tax liability will not be paid.
When the relevant tax liability is reduced
We’ll reduce the amount you’re jointly and severally liable for by any penalties you’ve paid for the same amount under:
section 61 of VAT Act 1994 – VAT evasion: liability of directors etc
section 28 of Finance Act 2003 – Liability of directors etc where body corporate liable to penalty for evasion of customs duty etc
paragraph 19 of Schedule 24 to Finance Act 2007 – Liability of company officer where company liable to penalty under that Schedule
paragraph 22 of Schedule 41 to Finance Act 2008 – Liability of company officer where company liable to penalty under that Schedule
What if the company no longer exists
If the company that has been involved with the tax avoidance or evasion no longer exists, where we refer to you being jointly and severally liable with the company, this means you being:
solely liable for the relevant tax liability where no other individual has been given a joint liability notice for that liability
jointly and severally liable with anyone else that has been given a joint liability notice for the relevant
tax liability
Where this factsheet refers to a company's liability or liabilities, in the case of a company that no longer exists, this means, its liability or liabilities immediately before it ceased to exist.
More information about joint and several liability notices
You can find more information about joint and several liability notices, tax avoidance and tax evasion in our guidance. Go to www.gov.uk and search for 'JSL Notices'.
Your appeal and review rights
If we give you a joint liability notice, the notice will include our offer to review our decision. If you disagree with our decision you can accept our offer to review it or you can appeal to the independent tax tribunal. However, you cannot challenge the existence or amount of any tax liability of the company to which this joint liability notice relates.
If you want a review
You can accept our offer to review the decision to give you the notice.
You can accept our offer of a review by writing to tell us why you think our decision is wrong. You must do this by the later of:
30 days from the date of the notice
if we’ve given you an extension notice, by the date shown on the extension notice
An HMRC officer not previously involved in the matter will carry out the review. If you disagree with the outcome of the review, you can still appeal to the tribunal.
We’ll take into account anything you tell us when you ask for a review. You'll have a chance to give more information about your case during the review.
You cannot accept our offer of a review and appeal to the tribunal at the same time.
If you want to appeal to the tribunal
If you disagree with the notice, you can appeal to the First-tier Tribunal.
If you want to appeal, you must do so by the later of the following:
30 days from the date of the notice
if we’ve given you an extension notice, the date shown on the extension notice
if you’ve asked us for a review, 30 days from the date of the notice telling you the review outcome
If you appeal to the tribunal you’ll need to send them a copy of the notice at the time. If you do not, they may refuse to consider your appeal.
Appeal in respect of company liability
If you want to appeal or take part in an appeal on behalf of the company:
you must have been made jointly and severally liable for a tax liability of the company
the company must be subject to an insolvency procedure
an appeal by the company for that tax liability must not be in progress or been resolved
The appeal must be made within 30 days of the date the joint liability notice is given and may be made even if a time limit for the company to appeal has expired.
More information about appeals and reviews
You can find more information about appeals and reviews:
online – go to www.gov.uk and search for 'disagree with a tax decision'
in factsheet HMRC1, ‘HM Revenue and Customs decisions – what to do if you disagree’ – go to www.gov.uk and search for 'HMRC1', or phone us and we'll send you a copy
For more information about appealing to the tribunal, go to www.gov.uk/tax-tribunal
You can also phone the tax tribunal helpline on 0300 123 1024.
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