In John Strange v HMRC [2025] TC09448, the First Tier Tribunal (FTT) upheld a Personal Liability Notice (PLN) issued to a company’s sole director. The company’s failure to pay National Insurance (NI) over a 22-month period was attributable to neglect on the director's part.
Mr Strange was the sole director and controlling shareholder of S&M Property Maintenance Scotland Limited (SMPMS Ltd).
- SMPMS Ltd fell into financial difficulties due to the number of staff it had recruited, leading to cashflow problems.
- Cutting staff numbers was not considered an option, as the company could charge clients for each man per day. The focus was on paying staff.
- Mr Strange looked for more contracts to address the company's financial difficulties. He borrowed money from family and friends to pay wages, but ultimately the company entered Liquidation in June 2018.
- Mr Strange was responsible for all financial aspects of SMPMS Ltd, including paying staff wages, which he ensured happened by the 17th of every month.
- Payroll information was sent to SMPMS Ltd's accountant who produced payslips with deductions for PAYE and National Insurance (NI).
- Mr Strange was advised of the amounts to pay HMRC and was aware of the statutory obligation to make payment.
- Between August 2016 and June 2018, the company accrued NI debts (including interest) to HMRC totalling £103,421.
- A Time to pay arrangement was made with HMRC but this was not complied with due to lack of funds. HMRC were, "At the back of his mind".
- Mr Strange was the only signatory on the company’s bank account and decided which creditors to pay, following a review by himself and another staff member.
- In December 2019, HMRC issued Mr Strange with a Personal Liability Notice (PLN) relating to the NI debts.
- Following a Statutory review, Mr Strange Appealed to the First Tier Tribunal (FTT).
In considering the conditions for a valid PLN to have been issued, the FTT found that:
- There was an underpayment of NI.
- No payments had been made to HMRC from the period August 2016 to May 2018. During that period, SMPMS Ltd had £783,000 deposited in its bank account.
- Mr Strange was an ‘officer’ of SMPMS Ltd.
- As director, he had an obligation to ensure the company settled its debts as they fell due, as well as ensuring the company’s affairs were conducted in a proper and businesslike manner.
- SMPMS Ltd’s failure to pay NI was attributable to neglect on the part of Mr Strange. His actions were not those of a prudent and reasonable person.
- Mr Strange deliberately decided to withhold payment of PAYE and NIC to assist in part funding the company and pay other creditors with money that ought to have been remitted to HMRC.
- It was reasonable for HMRC to treat Mr Strange as the sole culpable officer.
The appeal was dismissed.
Useful guides on this topic
Personal Liability Notices (PLNs)
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer all or part of the liability to pay the debt to one of its officers.
Directors' responsibilities and duties
What duties and responsibilities does a director have? What is the definition of 'director'?
Liquidation
How do you wind up (liquidate) a company? What types of liquidation are there? What are the formalities and the tax consequences of liquidation?
Time to Pay agreement
Businesses and self-employed taxpayers with outstanding tax liabilities may be eligible for support with their tax affairs through HMRC’s Time To Pay service.
How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
Statutory Review (by HMRC)
What is a Statutory Review? When does HMRC offer a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? When does HMRC offer a Statutory Review?
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