Class 1: Personal Liability Notices: Purpose of an enquiry - Establishing fraud or neglect
Section 121C, Social Security Administration Act 1992
Prior to any decision being made by HMRC to issue a PLN, a thorough enquiry will always be undertaken to establish the facts and circumstances behind the company failure to pay the contributions due.
A thorough enquiry will include a review of the available company books and records and inviting voluntary representations from the directors or other officers of the company. The officers in question are given every reasonable opportunity to provide any information they feel is relevant to the failure to pay the contributions due and to address HMRC’s concerns.
The purpose of a Personal Liability Notice enquiry is to:
- Quantify the company NIC debt with supporting documentary evidence
- Establish why the National Insurance Contributions were not paid, and establish the facts and circumstances surrounding the failure
- Identify those officers who were involved in the failure to pay the contributions due
- Where there is more than one ‘culpable officer’, investigate the degree to which each officer was responsible for the failure and decide what proportion of the outstanding contributions should be apportioned to each officer.
- Establish if there is sufficient evidence for HMRC to show ‘on the balance of probabilities’ that the failure to pay the contributions due was attributable to the negligent or fraudulent conduct of one or more officers of the company
- Examine the financial transactions of the company and in particular identify what other payments were being made by the company at the time of the failure and to whom
- Look at what steps, if any, were taken by the company to address the failure to pay the contributions due
- Consider and respond to any representations made or information provided by the directors or other officers of the company