Joint and several liability of company directors and certain other individuals for tax debts of companies and limited liability partnerships
Produced in partnership with David L. Irvine and Nathan Langford of Kirkland & Ellis International LLP
Joint and several liability of company directors and certain other individuals for tax debts of companies and limited liability partnerships

The following Tax practice note produced in partnership with David L. Irvine and Nathan Langford of Kirkland & Ellis International LLP provides comprehensive and up to date legal information covering:

  • Joint and several liability of company directors and certain other individuals for tax debts of companies and limited liability partnerships
  • Background
  • Commencement
  • Commencement of tax conduct measures
  • Commencement of coronavirus measure
  • When does joint and several liability apply under FA 2020?
  • Meaning of joint and several liability if the underlying entity no longer exists
  • Joint and several liability in respect of tax avoidance and evasion cases (the tax avoidance and evasion measure)
  • Who can be given a JLN in cases of the tax avoidance and evasion measure?
  • Conditions for a JLN to be given under the tax avoidance and evasion measure
  • More...

The Finance Act 2020 (FA 2020) introduced measures enabling HMRC, in certain insolvency-related circumstances, to make:

  1. directors, shadow directors and certain other individuals participating in the management of a company

  2. participators in a company, or

  3. members or shadow members of a limited liability partnership (LLP)

personally liable for amounts of tax or certain tax penalties owed by the companies or LLPs on a joint and several basis by giving such individuals a joint and several liability notice (JLN).

These measures were originally conceived as part of measures for:

‘...tackling the small minority of taxpayers who deliberately abuse the insolvency regime in trying to avoid or evade their tax liabilities, including through the use of phoenixism.’

Broadly, these HMRC powers are designed to increase the adverse consequences for individuals performing a management function in relation to a company or an LLP, where that entity is:

  1. engaging in specific categories of ‘bad’ behaviour, and

  2. there is a risk (due to a potential or pending insolvency) that HMRC will not be able to recover the full amount of any tax liability or penalty from the entity

At a high level, the ‘bad’ behaviours which these new rules seek to tackle are where:

  1. the company or LLP has engaged in tax avoidance or tax evasion

  2. the company or LLP has been penalised (or is subject to litigation relating to the imposition of a

Popular documents