National Insurance Personal Liability Notice

What is a Personal Liability Notice?

A Personal Liability Notice was introduced by Section 64 of the Social Security Act 1998 and come into effect from 6th April 2009.

Personal Liability Notice system was introduced to deal with abuses of NIC and to act as a deterrent against future abuse and losses.

HMRC officers seek to prove that there is evidence to show that the company's failure to pay national insurance contributions was attributed to neglect or fraud or an individual who was an officer of the company at the time of the failure. HMRC described the officers as culpable officers in the Personal Liability Notice.

The right of recovery by Personal Liability Notice includes all contributions payable by the company for both directors and employees of: -

  • Employers and Employee National Insurance Contributions.
  • Class 1a and 1b National Insurance Contributions.
  • Interest in respect of National Insurance Contributions.
  • Penalties in respect of National Insurance Contributions.
  • Any individual issue with a Personal Liability Notice becomes liable for the company National Insurance Contribution debt specified in the notice.

HMRC Investigators issue a Personal Liability Notice when a company has failed to pay National Insurance contributions and that failure is the opinion of HMRC, attributable to fraud or neglect on the part of an individual who was an officer of the company when the National Insurance contribution should have been paid.

HMRC officers will generally only commence Personal Liability Notice enquiries where they have a strong belief that they can recover a significant proportion of the unpaid National Insurance contribution from one or all of the officers of the company.

HMRC investigators will: -

  • Examine the records and books of the company.
  • Invite representations from the directors of the company to find out reasons of failure to pay.
  • Determine the facts and circumstances surrounding the company failure to pay national insurance.
  • Consider the extent of negligence or fraud of each officer in the company for personal liability.
  • In cases were there is more than one officer seek to fairly and reasonably apportion the debt. HMRC investigators may seek to reach an agreement otherwise there could be a prosecution.

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Fraud & Tax Offences / National Insurance Personal Liability Notice

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