Limited Liability Protection
The Finance Act 2020 gave HMRC authority to recover unpaid company taxes from the directors of companys, where the company itself was unable to pay the taxes due.
On the face of it this seems to override the major benefit of trading through a limted company, which is that if the company is unable to pay its liabilities, then its shreholders and directors are not liable.
The legislation however restricts HMRC’s ability to recover the unpaid taxes to instances of tax avoidance and evasion. The objective of the legislation is to deter company directors from undertaking the most serious cases of tax evasion.