In the past few weeks we have seen coronavirus spread throughout the UK wreaking havoc on businesses in its wake. Staff have been forced into lockdown, furloughed or required to work from home. Transport has been interrupted and supplies that we would usually take for granted, have been restricted. So, were you ready?
Following Royal Assent of the Finance Bill 2019/20, directors, LLP members, shadow directors and other persons involved in a Company’s, or an LLP’s, tax avoidance, evasion or repeated non-payment of taxes/phoenixism will be jointly and severally liable for the business’s outstanding tax liabilities if the business becomes insolvent or potentially insolvent.
The majority of businesses operate a director’s loan account (“DLA”) to enable a director to extract credit from the Company which is not a problem during the normal trading of a solvent Company. DLAs can also be used to allocate expenditure by the Company for the benefit of directors and vice versa.
Crown preference for most taxes was abolished in 2003 following the introduction of the Enterprise Act because it was considered to be unfair to other creditors.