Is Director liable for penalties?

Is Director liable for penalties?

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I had a conversation the other day with a new client regarding IR35 and payroll issues. I informed the client that as a Limited Company employing the services of self employed sole traders, she (or the company) would be liable for lost tax and NICs should HMRC determine the workers to be employees. Also the company should probably be operating a CIS scheme if the workers are truly subcontractors.

The response I received was that if HMRC did come knockin and imposed any heavy penalties etc, she would simply close the company down to avoid any liability. If she was to close down the compnay, can HMRC pursue a director for any penalties and lost tax in such and similar situations, or does the 'Limitted Liability' protection of a Limited Company protect directors from HMRC in the same way as it does from creditors?

Not come across this response before, so it caught me off guard and made me question my understanding!

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By Alan Ferris
27th Mar 2012 09:49

Not a good idea

Off the top of my head:

If a company fails to pay over PAYE & NIC's because of a director’s ‘negligence’, HMR&C can put the liability onto the director under Section 121C of the Social Security Administration Act 1992.

Also, if they then want to form a new business, HMRC are likely to use its powers to require deposits against future PAYE & NIC due.

Will loose ability to get gross CIS certificate.

 

 

 

 

 

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By FrogHappy
28th Mar 2012 13:01

Thanks. Yes that is what I would have thought, although I didn't actually know where this was documented.

If anyone else has any further thoughts, please continue this thread.

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