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HMRC internal manual

National Insurance Manual

NICs Personal Liability Notices (PLN): who can be issued with a PLN?

Section 121C of the Social Security Administration Act 1992

A Personal Liability Notice (PLN) can be issued to any individual who was acting as an officer of the body corporate at the time of the failure to pay the National Insurance contributions due under statute, and where HMRC is of the opinion that the failure to pay was attributable to the fraud or neglect by that individual. In the context of the legislation such officers are described as “culpable officers”.

Section 121C(9) defines an “officer” of a company as “any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act as such; and in a case where the affairs of the body corporate are managed by its members, any member of the body corporate exercising functions of management with respect to it or purporting to do so_”._

Typically, HMRC will issue a PLN to a formally appointed director or company secretary. However, inclusion of the statement, “or any person purporting to act as such” brings within the scope of the legislation any individual who can be shown to have been acting as a shadow or de facto director, or performing a role and having duties normally associated with that of a director.

Where the officer is not a formally appointed director or company secretary, a PLN can be issued if it can be established that the individual concerned was:

  • substantially managing the affairs of the company; or
  • someone in accordance with whose direction or instructions the directors were accustomed to act; or
  • a shadow director of the company

A shadow director is someone who is not a named director of the company but nonetheless does in fact direct or control the company.  A shadow director is defined in section 251 of the Insolvency Act 1986 as “a person in accordance with whose directions or instructions the directors of the company are accustomed to act (but so that a person is not deemed a shadow director by reason only that the directors act on advice given by him in a professional capacity).”

A de facto director is someone who assumes the role of a director and claims and purports to be a director, although has never actually been formally appointed as such.

The legislation doesn’t define ‘manager’, however the term ‘manager’ was addressed during the House of Lords debate on the introduction of the legislation. Reference was made to the case of RE B Johnson & Co (Builders) Ltd, 1955 where it was stated:

“a manager would be, in ordinary talk, a person who has the management of the whole affairs of the company; not an agent who is to do a particular thing, or a servant who is to obey orders, but a person who is entrusted with the power to transact the whole affairs of the company


a person holding, whether de jure or de facto, a post in or with the company of a nature charging him with the duty of managing the affairs of the company’s benefit.”