Andrew Needham looks at circumstances in which a company director can be held liable for a company’s VAT debts.
One of the main attractions of forming a limited company is that it has limited liability. Under limited liability, a director or investor in a company is only liable for the money that was invested in it by them, so in the event that the company goes bankrupt, their liability is limited to that investment.
For example, if you form a company with £1,000 of shares and the company subsequently goes bankrupt, your liability is limited to the £1,000 you invested. Even if the company owes £50,000, the company’s creditors will not come after your house or assets; your liability is limited to the £1,000 originally invested.
Exceptions to the rule
Unfortunately for a company director, there are a number
