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HMRC internal manual

Compliance Handbook

Penalties for VAT and excise wrongdoing: other penalty issues: company and company officer penalties: insolvency or imminent insolvency

You must issue a personal liability notice, see CH406300, to all relevant officers of the company, for payment of all or part of the company penalty when

  • the company’s deliberate wrongdoing has been attributed to the relevant company officers, and 
  • either the company is insolvent,
  • or there are grounds to suspect that the company may soon become insolvent.

In these circumstances it is irrelevant whether or not the company officers gained or sought to gain personally from the deliberate wrongdoing.

You must therefore pursue payment of all or part of the penalty from all of the relevant liable officers, see CH98680. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If at the time when you are issuing the penalty assessment to the company you have decided that a penalty is not to be apportioned to the company’s officer or officers, you cannot pursue the officer or officers for payment of the penalty even if the circumstances subsequently change. For example, if the company becomes insolvent later.

Likewise you cannot change the proportion of the company’s penalty that has already been notified to the officer or officers.

This means that where a company becomes insolvent, or there is a risk that they will go into liquidation, you must act quickly in issuing the penalty assessment and the personal liability notice or notices where the deliberate inaccuracy is attributable to the officer or officers.