HMRC Joint Liability order experience

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Has anyone had any experience in obtaining a joint liability notice from HMRC relating to PAYE/NI in respect of an employee (manager) convicted fraud?

 

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By David Ex
23rd May 2024 16:59

Yes, I imagine so.

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Replying to David Ex:
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By kelly788
23rd May 2024 18:16

I'm looking for information on which department at HMRC to contact regarding this. Fraud, debt management & employers helpline unable to assist.

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By More unearned luck
23rd May 2024 21:44

Are you referring to schedule 13 FA 20?

Who has the manager defrauded? You or HMRC? If the former, why should HMRC help you recover your losses - it's not their job. If the latter, what is your interest in obtaining a joint liability notice (if there is such a thing)? Why would it help you?

If you want HMRC to recover your company's unpaid PAYE from the manager and not the company you will need HMRC to issue a joint and several notice and for HMRC to use the several bit against him and not your company?

Are the conditions in sch 13 met? It seems to me that sch 13 is designed to be used when the employer can't pay because it is insolvent (or as good as). Is the manager worth suing? Was he a director (or as good as)?

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Replying to More unearned luck:
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By kelly788
23rd May 2024 23:05

Both HMRC and the client themselves have been defrauded.
The joint and several liability order would be to pursue the employee in the instance that the company is unable to pay the amount due to HMRC and others following the fraudulent activity and is on the verge of insolvency.
Not a director - the employee was the office manager.

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Replying to kelly788:
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By More unearned luck
24th May 2024 14:26

You seem to be implying that the same defalcation defrauded you and HMRC at the same time . What sort of act does that?

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Replying to More unearned luck:
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By kelly788
24th May 2024 15:07

Fraud in a position of responsibility.Bank details for HMRC and other payments changed to those of the employee.
(Payee name remaining correct) HMRC correspondence address changed to avoid collections.

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Replying to kelly788:
Stepurhan
By stepurhan
24th May 2024 15:33

kelly788 wrote:

Fraud in a position of responsibility.Bank details for HMRC and other payments changed to those of the employee.
(Payee name remaining correct) HMRC correspondence address changed to avoid collections.

That is them defrauding you. How is it defrauding HMRC? HMRC have not been tricked into not receiving the money, it simply hasn't been sent to them.
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Replying to stepurhan:
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By kelly788
24th May 2024 16:36

Fraudulent submissions, omissions etc?

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Replying to kelly788:
Stepurhan
By stepurhan
28th May 2024 10:24

kelly788 wrote:

Fraudulent submissions, omissions etc?

What fraudulent submissions have they made to HMRC? It sounds like HMRC were informed of the correct liability, they just weren't paid.

If the employee had also made submissions to HMRC that failed to show the correct liability, avoiding the risk of discovery by HMRC pursuing the debt, then you might be able to bring HMRC into the matter.

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Replying to stepurhan:
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By FactChecker
24th May 2024 23:06

If, as I understand it, EE has done various things which resulted in payments (authorised by the ER in the belief that the payments are going to meet HMRC liabilities) ending up elsewhere ... then I'm with you all the way.

- EE has defrauded ER (but not HMRC with whom he didn't have a liability);
- ER have the double-whammy in that (in addition to having money stolen from them), they still have their HMRC liability to pay ... and this is not an RE against late payment.

Whether there is a separate problem due to ER telling HMRC they've been paid is yet another different issue?

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Replying to kelly788:
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By Leywood
25th May 2024 09:53

Your internal controls clearly were not well thought through nor strong enough. Failure of the directors.

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Replying to Leywood:
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By kelly788
25th May 2024 13:23

Thanks - great value added.

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By FactChecker
25th May 2024 15:42

The point is that you have to first look back (to ascertain the facts including the cause and responsibilities) *before* you try moving forward with an appropriate set of actions - which as always should be in the following order of priority:
1) prevent immediate/similar re-occurrence; 2) ensure via new processes that next time goes correctly; 3) identify means to minimise historical loss.

You appear to have already moved to step 3 .. so take Leywood's comment as a gentle reminder not to forget the first 2 steps.

Also, of course, it suggests (along with most responses on here) that your desire to go for a "joint liability notice from HMRC" is most likely a dead-end.

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Replying to FactChecker:
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By kelly788
25th May 2024 16:22

Thank you - The EE was immediately suspended & financial control restricted to directors only so points 1 & 2 covered.
Point 3 is the issue and given the responses it seems insolvency is the likely outcome.
Thank you

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Replying to kelly788:
Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
28th May 2024 08:59

Happy to speak to the Directors if they need a second IP opinion.

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
24th May 2024 09:18

Do the following criteria fit in your situation?:

An authorised HMRC officer can give a joint liability notice to an individual if all the conditions A to D below have been met. These conditions only apply to the relevant tax liability of a company that has been involved in repeated insolvency and non-payment.

Condition A
In the last 5 years an individual had a relevant connection to at least 2 ‘old companies’ that were subject to an insolvency procedure and had a tax liability.

Condition B
A ‘new company’ is or has been carrying on a similar trade or activity to the old companies. That trade or activity must be the same, or similar to, a trade or activity previously carried on by any 2 of the old companies.

Condition C
The individual has a relevant connection to the new company.

Condition D
The total unpaid tax liability of the relevant old companies must be more than (both must apply):
• £10,000
• 50% of the total amount of those companies’ liabilities to their unsecured creditors

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Replying to Insolvency Practitioner:
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By kelly788
24th May 2024 13:10

Condition A may need more investigation.

Thank you - appreciate the response

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Replying to kelly788:
Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
24th May 2024 13:30

It's really aimed at Directors who have repeated insolvencies under their belt. Might not be relevant to your situation, unfortunately.

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Replying to Insolvency Practitioner:
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By More unearned luck
24th May 2024 14:18

You quote the para 3 conditions. Para 2 seems to be a slightly better bet, if false RTI submissions were made. But regardless of which para is considered the bad conduct needs to that of the company and not merely that of an employee. The person with the controlling mind needs to be the baddie.

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Replying to Insolvency Practitioner:
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By Paul Crowley
24th May 2024 14:26

Not very common then?

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