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HMRC internal manual

National Insurance Manual

Class 1: Personal Liability Notices: Who can receive a PLN?

Section 121C, Social Security Administration Act 1992

A Personal Liability Notice can be issued to any individual who was an officer of the company 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”.

The above legislation defines the word officer as meaning

  • any director, manager, secretary or other similar officer of the company, or any person purporting to act as such. This includes shadow or de facto directors; and
  • in a case where the affairs of the company are managed by its members, any member exercising functions of management with respect to it or purporting to do so.

Normally, HMRC will only issue a PLN to a person who is a director or company secretary of the relevant company. A PLN can however be issued to someone not holding one of these positions providing 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 but who directs or controls the company. Acting as a shadow director is not necessarily an offence in itself, but the presence of a shadow director is an indicator of risk. This is because the management of a company by someone not listed as one of its directors suggests an attempt to conceal something.

The meaning of manager was addressed during the House of Lords debate on the introduction of the legislation when specific 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.’