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HMRC internal manual

Enquiry Manual

Close Companies: Settlement - Change of Shareholders

If the defaulting shareholders have sold out to new ‘innocent’ ones, you should normally settle with the company. Usually the Deed of Sale for the shares will include an indemnity to the new shareholders by the old shareholders against any claims for back tax. The old shareholders can make an offer on behalf of the company, which is often done. Such an offer should be based on company liabilities. However, if they will not or have disappeared, and you have good evidence of company irregularities, you should seek to settle with the company. The new shareholders sometimes point to the indemnity suggesting that you should settle with the former shareholders but the indemnity is from old to new shareholders not from old shareholders to HMRC and we are not directly concerned with it.