Nick Davies examines the various ways that tax liabilities can be passed on to company directors in the event of a liquidation.
Aâ¯limited companyâ¯is a distinct legal entity that is separate from its owners. This means that the company itself, as a taxpayer, is responsible for its debts and liabilities, and its owners (shareholders) have limited liability, meaning their personal assets are protected beyond their investment in the company.
Historically, this has provided a great deal of comfort to directors in the event of a company failure, and there was a general belief that arrears of, in particular, PAYE or National Insurance Contributions (NICs) and VAT could simply be left behind.
The ‘phoenixism’ culture
Unfortunately, this belief gave rise to the widespread culture of ‘phoenixism’, whereby a trading company would fail
