HMRC are currently awaiting the passing by Parliament of the latest Finance Act, which will give them a new weapon in their fight against tax abuse arising from insolvencies.
HMRC have regarded for some time that insolvency laws are open to abuse and that this abuse has led to the loss of tax, whether it be VAT, corporation tax or PAYE. The Finance Act will now give HMRC powers to make directors and shareholders jointly and severally liable for outstanding tax liabilities.
Thy will identify those in a company who have facilitated the tax loss. Be it someone who evades tax or facilitates tax avoidance, such as disguised remuneration schemes.
Where HMRC believe an insolvency or the preparations for an insolvency have taken place to allow a company to avoid its tax liabilities, then HMRC can use their powers to make individuals personally responsible for the tax that the company owes.
It should be stressed that the new regulations are aimed at what HMRC regard as serial offenders who have been involved in at least one prior insolvency where there were significant amounts of tax not collected due to the insolvency.
If you are considering an insolvency at this time, especially due to the effects of Covid-19, please seek advice at the earliest opportunity. We here at Churchill Tax Advisers can advise you of the course of action you should take. Please call our dedicated number.