NIM12208 - NICs Personal Liability Notices (PLN): what will HMRC consider before issuing a PLN?

Section 121C of the Social Security Administration Act 1992 (SSAA 1992)

It’s important that HMRC acts to protect directors of genuinely failed businesses and those who are regarded to have taken all reasonable steps to prevent or minimise the company Income Tax PAYE and National Insurance contribution (NICs) liabilities, from the scope of this legislation.

Before issuing a PLN, HMRC will carry out an enquiry to establish the reasons, and investigate the facts and circumstances behind the failure of the body corporate to pay the NICs due.

Typically during the course of a PLN enquiry HMRC will:

  • review the books and records of the body corporate
  • quantify (using best judgment where necessary) the amount of NICs the body corporate was liable to pay, and the amount it failed to pay
  • establish why the NICs were not paid, and establish the facts and circumstances surrounding the failure
  • identify those individuals who were acting as officers of the body corporate at the time of the failure to pay the NICs due; and examine their knowledge, role, responsibilities and functions, particularly in respect of payroll and financial matters
  • write to officers of the body corporate and invite them to provide information and make representations regarding the failure to pay the NICs due
  • where considered necessary, contact other parties associated with the body corporate - such as former accountants, payroll agents or former employees - to request information considered relevant to the enquiry
  • look at what steps, if any, were taken by the company to address the failure to pay the contributions due
  • where there is more than one potential culpable officer, investigate the degree to which each individual officer should be held to be culpable for the non-payment of NICs, and then seek to apportion the unpaid contributions according to their level of culpability
  • examine the financial transactions of the body corporate at the time of the failure to pay the NICs due to HMRC
  • consider and respond to any representations made or information provided by the directors or other officers of the company
  • establish if there is sufficient evidence for HMRC to show ‘on the balance of probabilities’ that the failure to pay the contributions due was attributable to the negligent or fraudulent conduct of one or more officers of the company