Chapter CH406200
| Published date | 11 March 2016 |
| Record Number | CH406200 |
| Court | HM Revenue & Customs |
The proportion of the company penalty that each officer is liable to pay will depend on the circumstances of the case.
Calculating the amount to be apportioned to each liable officer can never be an exact science but you must follow the guidance below as closely as possible. The way you calculate the liability will depend on whether the liable officer or officers gained or attempted to gain personally, or whether the company is, or is likely, to become insolvent.
The liable officer or officers gained or attempted to gain personallyUnder these circumstances you must establish, to a reasonable degree of accuracy, the amount each liable officer gained or attempted to gain personally, and compare this with the total gain upon which the potential lost revenue, see CH82150+ for the penalty is based.
If the total gain or attempted gain by the liable officer or officers is equal to or exceeds the amount of the actual gain by the company, then the amount of the total penalty should be pursued from the liable officer or officers. You must calculate the amount you apportion to each liable officer as the ratio of their gain or attempted gain to the aggregate of the total gain or attempted gains by all of the liable officers.
If the total gain or attempted gain by the liable officer or officers is less than the amount of the actual gain by the company as a result of the inaccuracy, only a proportion of the total penalty should be pursued from the liable officer or officers. You must calculate the amount you apportion to each liable officer as the ratio of their gain or attempted gain to the actual gain or potential gain by the company that resulted from the inaccuracy, failure or wrongdoing. Under these circumstances the company will still have to pay some of the penalty.
Example
All three directors of a company, Tam, Mohammed and Becky, were responsible for a deliberate inaccuracy resulting in a tax loss and potential lost revenue (PLR) of £100,000. The caseworker decides that the penalty on the company is 50% of £100,000 or £50,000. As a result of the inaccuracy
- Tam gained £30,000
- Mohammed gained £10,000
- Becky gained £60,000.
Because the aggregate of the officers’ personal gains (£100,000) is greater or equal to the total gain, the officers are liable to pay the entire £50,000 penalty between them. Tam’s proportion is 30%, Mohammed’s is 10% and Becky’s is 60%. These percentages are then applied to the penalty so Tam is liable to pay £15,000, Mohammed is...
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