Where an individual has been connected with repeated insolvent companies in the same or similar business sector, with outstanding amounts owed to HMRC, then HMRC is looking to crack down on directors who repeatedly offend and take action against those concerned personally.
HMRC is looking at individuals who have run up tax liabilities in a business and then look to avoid paying the liability by placing the company into an insolvency procedure (i.e. an insolvent liquidation) and then set up a similar business (a phoenix that rises from the flames of the old business) to carry out the same or similar business.
Whilst it is only a small minority of companies and directors that seek to gain an advantage in this way and HMRC recognises that the majority of companies become insolvent because they have genuine financial difficulties, the new legislation is targeted at those individuals who:
- use insolvency to side-step their tax liabilities
- do not pay proper regard to their tax affairs
To reduce the possibility that genuine small business start-ups and entrepreneurs are not caught up by this legislation, there are minimum thresholds that apply.
For a joint and several liability notice to be given, the total unpaid tax liabilities from the old companies must be more than both of the following:
- 50% of the total amount of those companies’ liabilities to their unsecured creditors
If you are a director of a business with liabilities due to HMRC for unpaid PAYE, arrears of VAT or unpaid corporation tax and you are now looking at your options for the future of viability of your business, with the world resurfacing after the COVID-19 crisis, then please contact a qualified, non-appointment taking, licensed insolvency practitioner now to discuss, in confidence, the next steps for you and your business.
The majority of directors make a common mistake when facing adversity in not seeking proper advice at an early enough stage from those qualified to advise. Instead, they either obtain advice and solace from other directors who have “gone bust before” and/or seek advice from non-qualified individuals (aka ambulance chasers) who do not have the best interests of the director(s) in mind. Or they simply struggle on, believing that they are acting properly, without any idea of the hole they are digging themselves into.
Don’t fall foul of the legislation or be mislead by individuals who historically sat in the corner of a pub professing to know everything about any given subject yet have never formally practised or been qualified to advise. If you are concerned about the future of your business then seek out advice from an Insolvency Practitioner and check their credentials out with their licensing body.
At My Insolvency, we work with the directors in understanding their business, the concerns and pressures that they are under as individuals and what they are seeking to achieve in the future for themselves personally and their business. So reach out to our team today for some expert advice and guidance: contact us.