NIM12211 - NICs Personal Liability Notices: payment received following the issue of a PLN

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

The serving of a Personal Liability Notice (PLN) on an individual officer of a body corporate makes that individual personally liable for the amount of unpaid contributions specified in the PLN (subject to appeal).

However, the serving of a PLN on an individual does not in itself remove the liability from the body corporate and it is still liable to pay the outstanding contributions until they are paid that is both are liable to pay the outstanding contributions.

If an individual officer issued with a PLN settles all or part of the contributions specified in the notice, then the body corporate’s liability to HMRC will be correspondingly reduced by the amount paid.

Equally if the company pays any of the outstanding contributions then the amount charged on a PLN will be reduced accordingly, and an amended PLN will be issued to each of the officers concerned.

Example

ABC Ltd owes £60,000 in unpaid Class 1 NICs and is in liquidation.

A PLN is issued to its 2 directors Mr X and Mr Y.

It has been determined that Mr X was largely responsible for not paying the NICs on time, although Mr Y knew about it.

Mr X’s apportionment is 75% (£45,000) and Mr Y’s 25% (£15,000).

The liquidator of ABC Ltd pays a dividend to HMRC.

£10,000 of this dividend is in respect of the company NICs debt. This reduces the company NICs debt to £50,000 (£60,000 minus £10,000).

So the revised amount due from Mr X in respect of his PLN is now £37,500 (75% of £50,000) and that due from Mr Y is now £12,500 (25% of £50,000).

An amended PLN will be issued to Mr X and Mr Y for these revised amounts.