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Company Secretary liable for unpaid corporation tax

Company Secretary liable for unpaid corporation...

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I have just received a call from a colleague who, returning home from our office this evening, was met by a a collector from HMRC demanding £12k in corporation tax from a company that she is secretary for.

As a firm of accountants we are company secretary to over 1000 companies. We are fully aware of the liability for penalties, for failure to submit annual returns etc, which can fall to the secretary in certain circumstances but I have never come across HMRC demanding corporation tax from the agent filing the tax returns.

Does anyone else offer this service of acting as company secretary whilst filing the returns and accounts and has anyone been approached by HMRC for corporation tax not paid by a client's limited company?

I realise that this is a laughable claim but surely an HMRC recovery officer would know who is liable and who is not!

Jon Lunn

Replies (19)

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DougScott
By Dougscott
30th Apr 2009 21:51

Pay up Jon!
Jon I can tell you are getting very stressed about this. Ask yourself is it worth it? I suggest you just pay up the company's debts now and then you can rest easy tonight. Not only that but you will have a warm glow inside because you will have made a Collector of Taxes very, very happy.

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By thomas34
30th Apr 2009 17:53

Jon
I'm not condoning what appears to be flawed verbal advice given by the Collector.

However, I'd like to take a more impartial view and look at the Collector's quandary in trying to collect tax revenues from individuals and companies who habitually ignore requests and in most cases make no effort to agree some sort of payment plan. Many of course hide behind limited liability status, cease trading and reinvent themselves a fortnight later.

One of your employees is an officer of the company and your premises act as the registered office. It would seem perfectly reasonable to me that the Collector should pay a visit to any address to progress the case. I would guess that you've made a few bob providing secretarial services to your 1,000 companies and I'm just surprised that you've had no problem before.

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By Accounting WEB
30th Apr 2009 16:54

Not quite a heart attack just yet
I hope my comments didn't portray a panicked individual running around franticly looking for his passport as that is certainly not the case.

I am however, amazed that such a claim should be made, not only because my colleague did feel a little harassed but imagine what else HMRC collectors are saying to leverage money out of people.

In Penny's first response she actually states that the letter is not stating that the liability is the Company Secretary’s but that HMRC just want to talk. I do not argue this but the comments made by the collector was the worrying bit as she actually turned up to our offices the day after attending my colleagues home, and expected a cheque from us.

I am sure the collector will hand it up to her boss and we will receive the demand as the registered office, however, you never know......

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By thomas34
30th Apr 2009 13:06

Jon and his 1,000 companies
You'll give yourself a heart attack if you overreact to every outrageous act by HMRC.

As you've said, it's a laughable claim. Just let them issue the default summons in the County Court which will show the defendant as being the limited company - even HMRC can't get that wrong. The summons should be sent to the latest registered office as shown at Companies House - your office if you've also provided that facility.

Either way, the director with whom you usually deal will need to see the claim form and either submit a defence within 14 days if relevant or buy himself an extra 14 days by submitting an acknowledgment of service.

Penny's first post probably sums up everything correctly.

There seems to be no written evidence that the defendant will be the company secretary - if that does transpire, then you may well become famous for rewriting English law.

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By Accounting WEB
30th Apr 2009 10:41

What type of Ltd Company....
It is a regular business (Furniture) with business premises, employees etc.

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By Anonymous
30th Apr 2009 08:28

Company Officer
Before you go on making complaints. Ask what type of company is it? Is it an Umbrella Company, MSC or something similar? Do the Company Officers have a liability that can follow them around?

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By Anonymous
29th Apr 2009 13:12

Complaint
Have to say, from what is reported, this is astoundingly bad practice from the officer concerned. Given the gravity of it, the immediacy of further proceedings, and the repeated insistence of a potential liability for a nominee company secretary, I would be tempted to by-pass the normal complaints procedure and ask to speak to a senior officer or even get your local MP on the case.

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By Accounting WEB
29th Apr 2009 12:47

So what happens now?
The 'boys' come round after the matter has gone to court, so sayeth the collector. Court happens next week as we have seven days to pay. I assume we will get the summons and therefore an opportunity to put in a defence but the collector who came in yesterday was unclear as to the next course of action as she is 'passing the case up'.

I am going to assume that any action will only be taken out on the company and this is the last we will hear from the collectors. I am however going to send a strongly worded letter asking for the authority under which this claim for payment is being made, so thank you for your comments regarding this.

So far as the question concerning the circumstances surrounding the debt, I did ask if HMRC had any reason to believe there was wrong doing (fraud) or any other fault relating to the Secretary and the collector did not believe so and just reiterated that as Secretary, my colleague, was liable.

I have to be honest, my sympathy falls as much with HMRC as much as it does with my beleaguered colleague, as I am sure they could do without not only the complaint generated from us but also the adverse reputation that will follow.

Now is not the time for examples of ridiculous claims being made by HMRC which lack legislative support and smack of desperation.

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By listerramjet
29th Apr 2009 10:59

I wonder
when they will start "sending the boys round"?

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By AnonymousUser
29th Apr 2009 09:19

Action
The company Secretary will not be liable for the companies debts.

Make an official complaint of the actions of the officer involved and follow it up. It is the best way to stop these type of actions.

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By Anonymous
28th Apr 2009 19:19

Perhaps
the Collector should be directed to HMRC guidance, which states in several places that

"Normally, directors and managing officers of limited companies are not personally liable for company debts" (Managing officer taken to include Secretary).

If she is arguing that the circumstances are not normal, ask her to cite the legal authority on which she is relying to collect the debt from an Officer of the company.

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By Accounting WEB
28th Apr 2009 17:02

An update
Andrew, thank you for that, I was under the same impression.

So far as what was written on the letter (re Penny Chambers comment), just after I posted my comment this morning, we had a visit from the tax collector concerned and she was confident that the amount could be sought from the company secretary.

I do not know whether she spoke out of turn, but she left us in no doubt as to what she wanted and who she wanted it from.

V-s-v needing a company secretary, we would rather not be appointed but sadly we have to wait for the banks to catch up with current legislation as many new bank account applications still insist on a company secretary. We will be phasing this out over time, but surely this demand, even if it is firmly filed in the 'don't be so stupid pile' still sets a worrying precedent for any tax agent operating as a coy sec.

Call me mercenary but who is going to pay for our defence against this rather daft request?

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By anony scot
28th Apr 2009 15:19

recent call
Recently had a call from debt management - quite sneaky about it - message left on office answering machine - please call number quoting reference. Phoned back, at no time did they identify themselves as debt management, quoted reference as it was a valid client reference. Person on other end of phone advised calling re client's unpaid tax and was I as agent in a position to pay it on behalf of client

They must be really desperate for cash if this is what it has come to

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By Anonymous
28th Apr 2009 11:15

does the co need a secretary
The legal duties of a co secretary are horrendous. I would never accept such an
appointment and as small co no longer need secretary why bother.

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By AnonymousUser
28th Apr 2009 10:41

Possible criminal offence ?
So long as the corporation tax is not within TMA, s108 (on a company which is not a body corporate or which is non UK incorporated), my understanding is that there is no personal liability on the company secretary.

More interesting though, and definitely more fun, is to write to the Collector and invite their views over whether they have personally committed a criminal offence contrary to the Fraud Act 2006, section 2, which, if tried on indictment, carries a maximum sentence of 10 years.

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By Accounting WEB
28th Apr 2009 10:18

Is this a worrying trend
In answering Fellowcrafts question; yes they are trying to hold my colleague responsible as the letter that the HMRC collections agent left (adressed to my colleague) states:

'I called today to discuss payment of the amount above .....
If you do not contact me I will start legal proceedings'

And thanks Doug, I will tell them to go away, however, maybe I should go round to this particular Tax Collectors house and tell her whilst stood on her doorstep!

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By Anonymous
28th Apr 2009 09:31

Company debt
Am I reading this wrong or are they trying to make the company secretary personally liable?

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DougScott
By Dougscott
28th Apr 2009 08:07

Tell them to go away!
Used to happen to us occassionally but you'd just tell them to go away as you were merely an accountancy firm and not in control of the company. They would then ask for details of who was in control of the company and if you knew them then you would give them provided they provided correct ID etc.

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By Ned Ludd
27th Apr 2009 23:00

frightening
we act as secretary for a few and that really is worrying.

im afraid ive not come across this before so cant help

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