In a previous article posted to this website entitled HMRC | Joint and Several Liability Notices, we outlined the extent to which HMRC is entitled to recover company debt in a situation where there are two or more directors, by making them joint and severally liable.

Tim Thompson of Kangs Solicitors now outlines the powers of HMRC to issue Joint and Several Liability Notices in circumstances where individuals have a history of association with companies that became insolvent leaving outstanding debt owed to HMRC.

There exists a scenario whereby some directors adopt a policy of deliberately incurring company tax liabilities and then render the company insolvent in order to avoid payment. They then set up a new company in order to trade in the same or a similar business. Occasionally, this procedure is adopted on more than one occasion.

This practice is colloquially known as ‘phoenixism’ or ‘phoenixing’ and there exists legislation to tackle this activity and render directors personally liable.

Kangs Solicitors Tax Team provides a wealth of experience when representing companies, directors and individuals in respect of both civil tax and criminal tax issues.

We are highly commended by the leading law directories, the Legal 500 and Chambers & Partners.

For an initial no obligation discussion, please call our Team at any of our offices detailed below:

The Relevant Law | Kangs Company Offences Defence Solicitors

The Finance Act 2020, in the case of repeated insolvency and non-payment cases, enables an authorised HMRC officer to give Notice provided that a number of conditions are met, which include the following.

Condition A

That there are at least two companies of which:

  • the individual had a relevant connection with the company at any time during the period of five years ending with the day on which the Notice is given (‘the five-year period’),
  • the company became subject to an insolvency procedure during the five-year period, and
  • at the time when the company became subject to that procedure—
    1. the company had a tax liability, or
    2. the company had failed to submit a relevant return or other document, or to make a relevant declaration or application, that it was required to submit or make, or
    3. the company had submitted a relevant return or other document, or had made a relevant declaration or application, but an act or omission on the part of the company had prevented HMRC from dealing with it.

Condition B

That another company (‘the new company’) is or has been carrying on a trade or activity that is the same as, or is similar to, a trade or activity previously carried on by:

  • each of the old companies (if there are two of them), or
  • any two of the old companies (if there are more than two).

Condition C

That the individual has had a relevant connection with the new company at any time during the five-year period.

Condition D

That at the time when the Notice is given:

  1. at least one of the old companies has a tax liability, and
  2. the total amount of the tax liabilities of those companies—
    • is more than £10,000, and
    • is more than 50% of the total amount of those companies’ liabilities to their unsecured creditors.

Phoenixism | Joint and Several Liability | Kangs Insolvency Solicitors

An individual may be served with a Joint and Several Liability Notice, at any time within the period of two years beginning with the day on which HMRC first becomes aware of facts sufficient for them to conclude that the four conditions above have been met.

Once those four conditions have been met and the Notice served, the recipients of the Notice are jointly and severally liable in respect of any tax liability of the old company:

  1. on the day on which the Notice is given;
  2. that arises during the period of five years beginning with that day and while the Notice continues to have effect; and
  3. on the day on which the Notice is given.

How Can We Assist? | Kangs HMRC Tax Appeal Solicitors

It is paramount that upon receipt of any Notice from HMRC legal advice is obtained as soon as possible.

It is possible to request a review of HMRC’s decision to issue a Joint and Several Liability Notice or indeed appeal to the First Tier Tribunal. However, there are strict time limits that apply.

Who Can I Contact? | Kangs National Tax Solicitors

We welcome enquiries by telephone or email.

We provide an initial no obligation consultation from our offices in London, Birmingham and Manchester.

Alternatively, we provide initial consultations by telephone or video conferencing.


Hamraj Kang
07976 258171 | 020 7936 6396 | 0121 449 9888

Tim Thompson
020 7936 6396 0121 449 9888

John Veale
0161 817 5020  | 020 7936 6396 07989 521 210