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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: Landfill Tax (LT): Who is liable to pay the debt? Company directors, managing officers, etc

Registered operators or controllers of a Landfill Site

Normally, directors and managing officers of limited companies are not personally liablefor company debts.

However, we may transfer, in whole or in part, a civil penalty for fraudulent evasion ofLT, from a company to a director or managing officer of a company if there is evidence toshow that the conduct giving rise to the penalty is attributable to the dishonesty of thedirector or managing officer.

Paragraph 19 (3) of Schedule 5 to the Finance Act 1996, provides:

“Where a notice is served under this paragraph

the portion of the basic penalty specified in the notice shall be recoverable from thenamed officer as if he were personally liable under paragraph 18 above to a penalty whichcorresponds to that portion; and the amount of that penalty may be assessed and notifiedto him accordingly under paragraph 32 below.”

Paragraph 19 (6) of schedule 5 to the Act defines managing officer as any manager,secretary or other similar officer of the company or any person claiming to be a manager,secretary, etc, or a director.

In the circumstances, we will allocate a non-VAT registration number to the companydirector or managing officer unless the debtor is registered as a sole proprietor.

If we impose a penalty we must enforce it even if there is little prospect of payment. Ifwe do not enforce these penalties dishonest company directors and officers may liquidate acompany on which a penalty is imposed and simply move on to form new companies.

The company is liable only for such portion (if any) of the penalty as remains after thedirector or other individual is separately assessed (paragraph 19 (4) of Schedule 5 to theFinance Act 1996).

Unregistered, unauthorised sites that are not landfill sites

Any officer of body corporate or unincorporated association that makes the disposal or knowingly causes or knowingly permits the disposal to be made can be held liable to pay Landfill Tax due at a site that is not a landfill site.

For a body corporate, this means a:

  • director
  • manager
  • secretary
  • chief executive
  • a member of the committee of management
  • or a person that purports to act as any of the above persons

It should be noted that some officers, such as directors, may be body corporates or legal persons themselves and be treated as liable accordingly. It should be noted that at least one director of an UK incorporated person must be a natural person (individual) as per Part 10 A, section 155 of Companies Act 2006.