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VAT personal liability notice

VAT fraud; vat personal liability notice

VAT Personal Liability Notice

A VAT Personal Liability Notice (PLN) may be issued by HMRC in the event of a company’s or a Limited Liability Partnership’s (LLP’s) failure to pay its VAT debts or VAT penalties to HM Revenue & Customs (HMRC). A VAT PLN will transfer all or part of the liability to pay the VAT debt to one or all of its officers.  Should HMRC issue a personal liability notice then being liable to pay such a penalty can have a direct and significant impact.

  • A VAT PLN is generally only used in cases where HMRC can prove that the underlying payment failure is attributable to the fraud or serious neglect of an officer.
  • A PLN will typically be issued when a company goes into liquidation with tax debts.

A VAT PLN for VAT penalties

  • A PLN may apply if a company is liable to a VAT penalty for deliberate wrongdoing.
  • The VAT wrongdoing is attributable to the deliberate action of an officer or officers of the company.
  • In addition, the PLN can only be issued if one of the following circumstances exists:
    • The officer gained, or attempted to gain, personally from the wrongdoing; or
    • The company is, or is likely to become, insolvent.

Who is an officer of a company?

  • A Company Director is an officer of that company.
  • Company officers include elected officers, managers and anyone who is acting in the role of director.
  • LLP officers are members.

Officers can mitigate the risk of being served a PLN by ensuring that they are properly advised in the event of potential corporate failure and take prompt and reasonable action to obtain advice and mitigate the situation in the event that the company starts to have tax payment issues.

Appeals

Due to the nature of the penalty it is not possible to seek to resolve the matter by way of alternative dispute resolution.  A VAT Appeal to the Tax Tribunal can be made by the individual who has received the notice as outlined below.

  • An officer may appeal against the issue of the VAT PLN.
  • A VAT PLN is subject to the same procedures as company penalties.
  • An officer of a company or LLP may apeal either the decision to raise a PLN against them or the amount of the PLN.
  • An appeal against a PLN is not an appeal against the underlying company penalty,nor does the outcome of the appeal affect the status of the company penalty.  Only the company can appeal the company penalty.

Legislation in respect of  a VAT personal liability notice

VAT: Para 22 Schedule 41 FA 2008  https://www.legislation.gov.uk/ukpga/2008/9/schedule/41

Contact us to discuss VAT personal liability notices

If you have received a VAT PLN contact us on 0161 883 2120 to discuss the matter on a without prejudice basis.

Details of our VAT specialists can be found at https://www.solvevat.co.uk/about/