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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: VAT: effects of death or incapacity on recovery action: death of a company director

Company directors are not usually liable personally for company debts. However, in cases of fraudulent evasion of VAT we may transfer a company’s liability for a civil penalty in whole or in part to a director of the company.

If there is an unpaid debt for which a deceased director is personally liable contact the Enforcement Technical Team, Liverpool for advice.

A company may be dissolved on the death of a director. Where a company is dissolved, under the Companies Act 1985 certain assets of the company belong as ‘bona vacantia’ to the Crown. It is possible to apply to the court to reinstate a dissolved company so that we can then take winding up action. But such action is not taken generally.

If the company continues to trade, we may take recovery action, but our action must be reasonable and proportionate in the circumstances. Give careful consideration to any request for time to pay.