Gary Brothers probes HMRC’s ongoing pursuit of ‘rogue’ company directors by lifting the ‘corporate veil’.
In what seems like forever ago now, Schedule 13 Finance Act 2020 gave HMRC new powers for them to issue joint and several liability notices to individuals for a company’s liabilities, where those amounts were unpaid due to tax avoidance and tax evasion, as well as repeated insolvency and non-payment.
In what was seen as a ‘game changer’, removing the corporate veil for directors, we have found that a large number of both insolvency practitioners and tax advisors are unaware of the power (mostly through a lack of HMRC use to be fair) or have not seen it actively used by HMRC.
Until recently, HMRC has used those powers rarely and judiciously, seemingly testing the water to see if the notices would stand up to scrutiny and challenge.
However, in recent developments, we understand that HMRC is now satisfied with the scope and extent of this new power, and its robustness to challenge. Certainly, we at Independent Tax are seeing a steady rise in the number of notices being issued, ranging from deliberate penalties charged in company cases transferred to the directors, through to the more extreme cases where the directors are being challenged to be jointly liable for substantial company debts in liquidation.
We expect to see the number of notices continue to escalate following the announcement in the Autumn Budget that the Government is going to increase collaboration between HMRC, Companies House and the Insolvency Service to tackle perceived ‘phoenixism’ to evade tax.
With apparently 5,000 more ‘highly trained’ HMRC investigative staff also announced in the Budget, no professional should be unaware of this stringent power available to HMRC.
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