Under measures introduced by Finance Act 2020, HMRC has powers to issue joint and several liability notices to an individual involved with insolvent companies that have unpaid tax debts.

Subscribers: go to your detailed version of this note: Joint & Several Liability of Company Directors etc

This is a freeview 'At a glance' guide to joint and several liability notices and tax avoidance penalties.

At a glance

Joint and several liability arises where a director, shadow director, or participator (or LLP member, in the case of an LLP) is given a notice in respect of:

(a) Tax avoidance and tax evasion cases

  • These include cases where a company is likely to become insolvent or is insolvent and the company has:
    • Entered into tax-avoidance arrangements and the General Anti-Abuse Rules (GAAR), the Disclosure of Tax Avoidance Scheme (DOTAS), the Disclosure of Avoidance Schemes for VAT and Other Indirect Taxes (DASVOIT) rules are likely to apply, or
    • Engaged in tax-evasive conduct, which is widely defined as:
      • Deliberately giving HMRC an inaccurate return, claim, document or information, or
      • Deliberately failing to comply with one of the following obligations:
        • The requirement to give notice of liability to Income Tax, Capital Gains Tax or Corporation Tax.
        • The requirement to give notice of liability to register for VAT.
        • Various notice of liability obligations in respect of indirect taxes such as landfill tax, excise duty etc, as set out in the Table in paragraph 1 of Schedule 41 to FA 2008.

(b) Repeated insolvency and non-payment cases

  • These are cases where there is repeated insolvency followed by 'phonexing' resulting in tax avoidance or failure to pay tax, involving two or more companies and then a third takes over the insolvent business.

(c) Cases involving penalty for facilitating avoidance or evasion

  • These cases are whether the insolvent company has been charged a penalty for facilitating avoidance or evasion or proceedings for such a penalty have started in respect of its conduct under the GAAR, DOTAS, DASVOIT etc

(d) Schedule 16 FA 2020: coronavirus

  • This provides for joint and several liability in insolvency cases where an income tax charge has applied to someone not entitled to a coronavirus support payment.


When a joint and several liability notice is given, the individual and the company are made jointly and severally liable for the debt, unless the company no longer exists, in which case the individual is wholly responsible for the debt.

The aim is to ensure fairness across the tax system and there are rights of appeal.

Under these provisions, an LLP is treated as a company and an LLP member is treated as a director or participator.

Useful guides on this topic

Insolvency FAQs for directors
This guide considers some common FAQs that directors may have about insolvency situations.

Joint & Several Liability of Company Directors etc
Subscriber guide describing the circumstances where a joint and several liability applies, together with examples, HMRC's interpretation and links.

Tax Avoidance Schemes
Tax avoidance is heavily targeted by HMRC, but how do you spot tax avoidance schemes? What are the types of schemes available that should be avoided? What disclosure requirements are there? When are tax clearances needed?

DOTAS: Disclosure of Tax Avoidance Schemes
What are the Disclosure Of Tax Avoidance Schemes (DOTAS) rules? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?

Penalties: DOTAS
This is a freeview 'At a glance' guide to the Disclosure of Tax Avoidance Schemes (DOTAS) regulations.

Promoters of Tax Avoidance Scheme (POTAS)
Who is a Promoter? What are the Promoters of Tax Avoidance Scheme rules?  What does this mean for promoters, intermediaries and clients?

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