Company PAYE and NIC arrears

PAYE and National Insurance arrears arise when a company deducts tax and National Insurance from employees' wages but does not pay it over to HMRC, using the money for cash flow instead. HMRC views this seriously because, like VAT, the money was never really the company's to spend. Most company tax debts cannot be passed to directors personally, but PAYE and National Insurance are an area where there is more risk: HMRC can issue a Personal Liability Notice for certain unpaid National Insurance where there has been neglect or fraud by a director or officer. As with all tax arrears, the safe response is to file Real Time Information on time, contact HMRC early, and propose a realistic Time to Pay arrangement. If PAYE arrears are building because the company simply cannot afford its wage bill, that is a sign the business may need formal rescue or closure, and advice should be taken without delay. HMRC, gov.uk

Key facts

What it is: Tax and NIC deducted from wages but not paid to HMRC
Personal risk: Personal Liability Notices possible for some unpaid NIC
First step: File RTI on time, contact HMRC early
Signal: PAYE arrears from an unaffordable wage bill needs advice

The personal-liability angle

Unlike most company debts, certain unpaid National Insurance can be pursued from a director personally through a Personal Liability Notice where there is neglect or fraud. That makes early action on PAYE arrears especially important. See HMRC debt for the wider picture.

Common questions

Can I be made personally liable for unpaid PAYE?

PAYE itself is generally a company debt, but HMRC can issue a Personal Liability Notice for some unpaid National Insurance where a director has been neglectful or fraudulent. Take advice if you are worried.

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Company PAYE and NIC arrears. PAYE and National Insurance arrears arise when a company deducts tax and National Insurance from employees' wages but does not pay it over to HMRC, using the money for cash flow instead. HMRC views this seriously because, like VAT, the money was never really the company's to spend. Most company tax debts cannot be passed to directors personally, but PAYE and National Insurance are an area where there is more risk: HMRC can issue a Personal Liability Notice for certain unpaid National Insurance where there has been neglect or fraud by a director or officer. As with all tax arrears, the safe response is to file Real Time Information on time, contact HMRC early, and propose a realistic Time to Pay arrangement. If PAYE arrears are building because the company simply cannot afford its wage bill, that is a sign the business may need formal rescue or closure, and advice should be taken without delay.

Speak to the right expert

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