Skip to main content

Joint and several liability – tax avoidance and evasion From HMRC

 


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 evasion

    • repeatedly 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.
Labels:

Comments

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Doubt on CS's collateral.

  Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents. The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser. Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty. GFG has consistently denied any wrongdoing. Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if t...
2 comments
Read more

Tax cut

  Sterling tumbled against the dollar to below $1 . 09 ,  hitting its lowest point since 1985 ,  after UK chancellor Kwasi Kwarteng unveiled a £45bn debt-financed tax-cutting package that sparked a historic increase in borrowing costs .  Kwarteng’s political and economic gamble includes the biggest set of tax cuts for 50 years ,  with the end of the 45p additional rate for the highest earners as well as a sharp reduction in levies on dividends .  But concern over the amount of debt required to finance the tax cuts triggered a frenetic day of trading that raised doubts on whether Britain’s new economic approach was sustainable .  «Britain will be remembered for having pursued the worst macroeconomic policies of any major country in a long time» . Kwarteng has staked the political fortunes of the Conservative party on the bet that the radical tax cuts and deregulation will raise Britain’s sluggish growth rate to 2 . 5 per cent .  «This is a new appr...
Post a Comment
Read more