Personal Liability Notices
Personal Liability Notices (PLNs)
Warning for Company Directors, Managers & Secretaries: HMRC can make you personally liable for your company’s unpaid National Insurance Contributions (NICs). It’s called a Personal Liability Notice (PLN), and once issued, the debt is yours to pay—even if the company no longer exists.
If you’re running a business, you need to understand how PLNs work, who they target, and how to challenge them.
What is a Personal Liability Notice?
A Personal Liability Notice (PLN) is a legal tool HMRC uses to recover unpaid National Insurance Contributions (NICs) from individuals within a company—directors, secretaries, senior managers, or even shadow directors.
It was introduced in 2009 as part of Section 64 of the Social Security Act 1998 to stop companies from dodging NIC payments by shutting down and walking away.
If HMRC believes the company’s failure to pay was due to neglect or fraud by a company officer, they can issue a PLN to make that individual personally responsible for the debt.
1. Employer & Employee National Insurance Contributions (NICs)
Right, listen up, because this is crucial. If HMRC slaps a Personal Liability Notice (PLN) on you, don’t think you’re only on the hook for one side of the coin. They can demand you personally cough up both the employer’s and the employee’s National Insurance Contributions (NICs) that the company failed to pay. That’s a potential double whammy hitting your pocket directly, covering contributions that should have originally come from the company coffers and the employee’s salary. Don’t underestimate how quickly this can add up!
2. Class 1A & 1B NICs (on employee benefits)
And the potential costs don’t stop at standard salary contributions. If the company provided benefits-in-kind – think company cars, private medical insurance, that sort of perk – and didn’t pay the necessary Class 1A or Class 1B NICs on them, guess who might have to foot the bill under a PLN? Yep, you. HMRC can add these specific benefit-related contributions to your personal tab, making the total liability even steeper. It’s another layer of cost linked directly to the company’s failure to handle its tax affairs correctly.
3. Interest on unpaid NICs
Now, here’s the extra sting in the tail. HMRC doesn’t just want the original National Insurance amounts; they want compensation for the delay. If those NICs weren’t paid on time by the company, interest will have been racking up on the outstanding amount. Under a PLN, you could be personally liable for paying off this accrued interest too, meaning the debt you face is potentially growing every single day it remains unpaid. It’s vital to understand this isn’t just about the base amount; delays cost serious money.
4. Penalties for late or unpaid NICs
Just when you thought it couldn’t get worse, think again! On top of the original NICs and the interest, HMRC can also whack you with penalties for the company’s failure to pay the contributions correctly or on time. These aren’t small change; penalties are designed as a punishment for non-compliance, and under a PLN, the responsibility for paying these potentially hefty sums can land squarely on your shoulders, piling yet another significant cost onto the bill. Getting hit with a PLN can mean facing a triple threat: the original tax, the interest, and the penalties.
The total debt can be thousands or even millions—and once a PLN is issued, you cannot hide behind your company. The debt is yours to pay.
Who issues PLNs?
A specialist Personal Liability Notice team at HMRC investigates companies across the UK.
1. A specialist Personal Liability Notice team at HMRC investigates companies across the UK.
Right, let’s be clear on this. If HMRC suspects serious jiggery-pokery with National Insurance payments at a company, it’s not just any tax inspector who might come knocking for the directors personally. They have a dedicated, specialist unit – a specific Personal Liability Notice (PLN) team – whose entire job is to investigate these precise situations across the UK. Think of them as the focused investigators looking specifically at whether individuals should be made to pay the company’s debt.
2. Based in London, but covers the whole UK,
Now, don’t get caught out thinking that just because this specialist PLN team has its main office hub in London, you’re off their radar if your company is based elsewhere. Absolutely not! Their jurisdiction is nationwide. Whether you’re running a business in Belfast, Bolton, or Brighton, this London-based team has the authority and the remit to investigate potential PLN cases anywhere in the UK. Geography is no shield here.
3. Highly trained investigators who focus solely on PLNs
Here’s the crucial bit you need to grasp: the people in this HMRC team aren’t generalists. They are highly trained investigators whose work is laser-focused purely on Personal Liability Notices. This is their specific patch, their area of deep expertise. They know the legislation inside out, understand the tests for proving culpability, and are skilled at digging into company affairs to see if a director or officer’s actions (or lack thereof) led to the NICs going unpaid. You’re dealing with specialists, not dabblers.
These aren’t general HMRC officers—they’re specialists, and they won’t issue a PLN unless they believe they can win and recover the money.
When does HMRC investigate?
HMRC will only consider issuing a PLN if:
1. The company failed to pay National Insurance
Right, let’s nail down the absolute basics. This whole Personal Liability Notice (PLN) business only even begins to be considered if the company itself has failed to pay its National Insurance Contributions (NICs). We’re talking about the money that should have gone to HMRC for things like state pensions and the NHS, but didn’t make it there from the company coffers. This is the fundamental starting point – no company failure to pay NICs, no grounds for HMRC to even think about chasing an individual director or officer personally.
2. There is evidence of neglect or fraud by a company officer
Now, here’s the crucial link that brings you personally into the firing line. Just the company failing to pay isn’t enough for a PLN. HMRC must have evidence pointing to neglect or even outright fraud by a company officer – that usually means a director, but could be others with significant control. This means they believe someone in charge was either deliberately dodging the NICs (that’s the fraud bit) or wasn’t careful enough, wasn’t fulfilling their duties properly to ensure they were paid (that’s the neglect part). It’s about your actions, or lack of appropriate action, leading to the unpaid tax.
3. HMRC believes they can recover a significant portion of the debt
Finally, there’s a practical angle HMRC considers, make no mistake. They generally won’t issue a PLN against you unless they believe there’s a realistic chance of actually recovering a significant chunk of the owed National Insurance from you personally. Think about it – chasing someone with absolutely no assets or income might sadly be a fruitless exercise for them. So, if HMRC is coming after you with a PLN, it strongly suggests they’ve looked into it and reckon you have the means, or will likely have the means in future, to actually cough up at least a decent portion of what the company originally failed to pay. It’s a ‘is it worth pursuing?’ test for them.
How does HMRC investigate?
An HMRC inspector will:
1. Examine the company’s books and records
Okay, so how does HMRC’s specialist PLN team start digging? First off, they’ll want to get right into the company’s books and records. We’re talking accounts, payroll details, bank statements – the whole financial picture. They’ll be meticulously combing through this paperwork to understand exactly what happened with the money and pinpoint where those National Insurance payments went astray, or if they were ever properly accounted for in the first place. This isn’t just a quick look; it’s a deep dive into the company’s financial health and history looking for clues.
2. Invite company officers to explain why NICs weren’t paid
Next up, expect contact directly. HMRC’s team will formally invite the relevant company officers – we’re typically talking directors here – to explain exactly why those National Insurance payments fell through the cracks. This isn’t just a casual chat; it’s a formal request, often via meeting or detailed letter, for your account of the situation. Be prepared to justify the non-payment, as they’ll be weighing your explanation against the hard evidence found in the company records and wanting to understand your role and decisions.
3. Assess whether neglect or fraud was involved
Right, this is the crucial bit where HMRC makes a judgment call. Using all the evidence they’ve gathered – the books, your explanations, meeting notes – they will assess whether the failure to pay NICs boils down to neglect or actual fraud by an officer. Were you deliberately trying to dodge the payments (fraud), or were you simply not taking proper care, failing in your duties to ensure the company paid up (neglect)? Making this distinction is vital, as establishing either neglect or fraud is the key legal trigger they need to potentially hold you personally responsible.
4. Apportion the debt fairly between those responsible
Now, what if HMRC finds that more than one company officer dropped the ball? They don’t just pick one person at random to carry the can. Instead, they’ll aim to apportion the debt fairly between all the individuals they believe were responsible through their neglect or fraudulent actions. This means they’ll look at the degree of fault for each person involved – who knew what, who did what (or failed to do what) – and try to split the outstanding National Insurance bill in a way that reflects that assessed responsibility.
5. Issue a PLN if they believe an officer was culpable (Note: You provided 6, but logically this is the next step, assuming 5 was skipped)
And here’s the crunch: If, after completing their investigation and assessment, HMRC concludes that an officer was indeed culpable – meaning their proven neglect or fraud directly caused the company to fail paying its NICs – then they will go ahead and issue that Personal Liability Notice (PLN). This is the formal document landing on your doorstep, potentially after some prior warning letters, shifting the company’s debt burden and making you personally responsible for paying up the specified amount (which could include NICs, interest and penalties). It’s the ultimate outcome of their investigation if they find you at fault.
Important: If there is more than one officer involved, HMRC will try to fairly divide the debt based on who they believe was most responsible.
Who can be held personally liable?
PLNs don’t just target official company directors.
Right, let’s bust a common myth straight away. Don’t think for one second that you’re automatically safe from a Personal Liability Notice just because your official title isn’t ‘Director’. HMRC’s net can be cast much wider than that. They’re looking at who actually had control and responsibility, regardless of the label on your office door or what’s listed at Companies House. Thinking you’re off the hook purely based on title could be a very costly mistake!
HMRC can also go after:
1. Directors
Okay, let’s state the obvious first: official company directors are absolutely prime candidates for receiving a PLN. If you’re formally listed as a director at Companies House, you have legal duties and responsibilities towards the company, including making sure its tax affairs, like National Insurance Contributions, are handled correctly. If the company fails to pay NICs due to neglect or fraud, HMRC will almost certainly look squarely at the registered directors first to see if they were culpable.
2. Company Secretaries
Now, what about the Company Secretary? While the role has changed over the years, don’t assume this position grants immunity. If the Company Secretary’s duties involved aspects of financial administration, compliance, or had influence over whether NICs were paid, they too could be found liable under a PLN. HMRC looks at the substance of the role and the individual’s actions (or inactions!), not just the job title itself. If you had relevant responsibilities and things went wrong due to your neglect, you could be in the firing line.
3. Senior Managers responsible for finances
This is crucial: it’s not just about official board positions. HMRC can target senior managers who held significant responsibility for the company’s finances, even if they weren’t formal directors or secretaries. Think Finance Directors (even if not on the board), Financial Controllers, or anyone else whose job meant they were effectively in control of managing payroll, authorising payments, and ensuring tax compliance. If you were the one holding the purse strings or managing the tax process, and NICs weren’t paid due to your neglect or dodgy dealings, expect HMRC to investigate your personal liability.
4. Shadow Directors (someone controlling the company behind the scenes)
Right, listen up, because this catches people out! HMRC can even go after so-called ‘Shadow Directors’. This is someone who isn’t officially appointed as a director, but acts like one behind the scenes, pulling the strings and giving instructions that the official directors tend to follow. Think you’re safe because your name isn’t formally listed anywhere? Think again! If HMRC finds evidence that you were effectively controlling the company’s actions, including decisions that led to unpaid NICs, they can treat you as if you were a director and potentially slap you with a PLN. They look beyond the paperwork to the reality of who was really in charge.
Key Point: Even if you weren’t an official director, if HMRC believes you had decision-making power over payments, you could be on the hook.
Do I have to attend HMRC meetings?
If your company is in liquidation, you are not legally required to cooperate with a PLN investigation.
BUT—ignoring HMRC is risky ! If you don’t engage, you:
- Lose your chance to explain your side of the story
- Can’t negotiate a fairer settlement
- Might face a worse outcome when HMRC issues the PLN
Best Approach: If HMRC is investigating, seek expert advice and respond carefully.
Will HMRC consider my representations?
YES! HMRC must consider any evidence or arguments made by company officers.
You can:
- Provide evidence that you weren’t responsible for the unpaid NICs
- Negotiate a lower amount if multiple officers are involved
- Argue that the failure to pay was not due to neglect or fraud
Strategic Tip: If directors acknowledge some responsibility early in the process, HMRC may agree to a settlement before issuing a PLN—potentially saving you from personal liability.
What if the company is in liquidation?
Even if the company is insolvent or liquidated, HMRC can still issue a PLN. They will:
- Ask the Liquidator or Official Receiver for company records
- Use these records to decide if a PLN should be issued
- Determine who was responsible for the unpaid NICs
Don’t assume liquidation will protect you. If HMRC thinks you were negligent or fraudulent, they can still pursue you personally.
What if I can’t reach an agreement with HMRC?
If no agreement is reached, HMRC will:
- Issue the PLN to each ‘culpable’ officer
- Explain how they calculated the amount
- Demand payment
Once a PLN is issued, the debt becomes your personal responsibility—and HMRC can take legal action to recover it.
Can I appeal a PLN?
YES—but it’s a formal legal process.
You can appeal to the Tax Tribunal, but…
- It can be a long and expensive fight
- You need strong evidence to prove you weren’t negligent or fraudulent
- HMRC will aggressively defend their case
Best Approach? Negotiate before a PLN is issued! If you can:
- Show you weren’t responsible
- Prove you weren’t neglectful
- Offer a reasonable alternative settlement
Final Thoughts: What Should You Do?
If HMRC contacts you about a PLN—DON’T IGNORE IT!
- Seek professional advice immediately
- Engage with HMRC but don’t admit liability too soon
- Keep detailed financial records to prove your case
- Negotiate before a PLN is issued—it’s much easier than appealing later
A PLN can financially ruin you. If you’re facing one, take action now to protect yourself.
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