D6.703 Joint and several liability of company directors etc
For accounting periods ending on or after 22 July 2020 certain individuals can be jointly and severally liable for debts of bodies corporate or unincorporate which are owed to HMRC in circumstances where the bodies corporate or unincorporate are insolvent or potentially insolvent1.
Joint and several liability allows the creditor, in this case HMRC, to recover against any of those that are jointly and severally liable without having to join the others. In this case, once an individual has been made jointly and severally liable, HMRC can recover the whole of the amount against that individual. The person against whom recovery is made then has a right of recovery against the other parties that were jointly and severally liable. Where a director is made jointly and severally liable with the company, HMRC will be able to recover against the director leaving the director to recover against the company. If the company is insolvent this means the director will in effect be subrogated to the rights that HMRC had against the company. This might be seen as HMRC gaining a preference over other creditors. Again, the provisions are controversial in that, in the case of companies, they are seen as 'piercing the veil of incorporation'. Many considered that HMRC already had sufficient tools to collect these debts.
The reference to bodies unincorporate brings in limited liability partnerships (but not 1907 limited partnerships or 1890 partnerships2).
The provisions do not apply to any tax