HMRC Joint Liability Notices and personal liability exposure: a growing risk for directors and insolvency professionals

HM Revenue & Customs (HMRC) has increasingly relied on Joint Liability Notices (JLNs) since the introduction of Schedule 13 to the Finance Act 2020.

These provisions significantly expand HMRC's ability to hold individuals personally liable for company tax debts, particularly following insolvency events.

Schedule 13 is intended to combat tax avoidance, tax evasion and "phoenix" activity involving repeated insolvencies and unpaid tax liabilities. Where the statutory conditions are met, HMRC may pursue directors, shadow directors and certain connected individuals personally for company tax debts.

For most directors and insolvency practitioners, the greatest risk arises from the repeated insolvency provisions. In broad terms, HMRC may issue a JLN where multiple companies connected to the same individual become insolvent within a five-year period, significant tax liabilities remain unpaid, and substantially the same business continues through a successor company.

A developing area of concern is HMRC's apparent willingness to investigate cases where multiple connected companies enter liquidation simultaneously. Whilst many would regard simultaneous liquidations arising from a single commercial failure as one insolvency event, HMRC has shown a willingness to scrutinise these situations where unpaid tax liabilities remain and a similar business subsequently continues.

TLT recently acted in a substantial tribunal appeal concerning a JLN issued under the repeated insolvency provisions. The director had obtained professional insolvency advice and placed two companies into orderly voluntary liquidation at the same time and then continued to trade in a new company.  Following detailed representations and arguments on behalf of the Director and his new company, HMRC withdrew the JLN and an order for costs was awarded.  

The case highlights the importance of examining whether the statutory conditions for a JLN have genuinely been met and challenging notices where they appear inconsistent with the underlying purpose of the legislation.  The Finance Act 2020 is relatively new, and therefore, there is little in the way of authorities around how its provisions may be interpreted by the Tribunal.  

A JLN is not limited to current directors and may extend to shadow directors, shareholders and other individuals sufficiently involved in the management or conduct of the company. Notices may also be issued before insolvency occurs where HMRC believes there is a serious possibility that insolvency will arise and tax debts will remain unpaid.

The practical message is clear. Directors should exercise caution where two or more of their companies have failed (potentially for the same economic reasons), there are HMRC liabilities, and they intend to wind up those companies and continue trading in a new company.  Insolvency practitioners and advisers should also familiarise themselves with the risks posed to directors under Schedule 13, and should ensure that when they are advising directors, these directors understand the potential personal liability risks arising under Schedule 13 and direct them to seek specialist advice where appropriate.  

The insolvency team at TLT has a wealth of experience in dealing with all manner of insolvency and restructuring issues and if you have any questions or require any advice in that respect, or specifically in respect of the content of this insight, please contact Brendan Logue.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.