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HMRC internal manual

Compliance Handbook

Penalties for VAT and excise wrongdoing: other penalty issues: company and company officer penalties: company officer liable to a penalty

An officer or officers of a company may be personally liable to pay all or part of the company penalty where

  • a company is liable to a penalty for a deliberate wrongdoing and 
  • the wrongdoing is attributable to the deliberate action of an officer or officers of the company, see CH98600.

Before you can consider charging a company officer penalty both of the two conditions above and one of the two circumstances below must also apply

  • the officer gained or attempted to gain personally from the wrongdoing, see CH98660, or 
  • the company is insolvent or likely to become insolvent, see CH98670.

Please note that an officer’s liability to pay a penalty also applies to inaccuracy penalties, see CH84610, and failure to notify penalties, see CH75520.

These complany officers are known in this guidance as ‘liable officers’.

In the limited circumstances where it applies, the power gives us the right to recover all or part of the penalty from the liable officer. It is important to note however that the penalty is always assessed on the company because it is the company who has committed the wrongdoing. This means that we do not assess the liable officers for the penalty, but we must send each liable officer a personal liability notice, see CH406300. Personal liability notices are however treated procedurally as if they are penalty notices.

Where there is more than one deliberate wrongdoing, each deliberate wrongdoing must be considered separately for the purpose of establishing whether it should be attributed to an officer or officers.

Please note that for Landfill Tax wrongdoings, a person who is an officer of a company, may also be personally liable for a penalty where they make, knowingly causes, or knowingly permit a disposal of material at an unauthorised waste site. Under these circumstances any penalty is issued to them as the liable person (P) rather than to them as a liable officer.

You cannot recover more than 100 per cent of the penalty from the company and its liable officers. See CH406200 for guidance about how to apportion the penalty between the liable officers.

There are four types of wrongdoings

  • the issue of an invoice showing VAT by an unauthorised person, see CH91350, or
  • misuse of a product so that it attracts a higher rate of excise duty, see CH91400 or
  • the handling of goods on which payment of excise duty is outstanding, see CH91550 or
  • knowingly disposing of, or causing or permitting the disposal of, material at an unauthorised waste site, see CH91800.

The wrongdoing must arise from the deliberate action of an officer of the company.

FA08/SCH41/PARA22 (1) & (2)