Directors may be liable for overclaimed CJRS grants

Where HMRC believe a company (including LLPs) is insolvent or about to become insolvent, and overclaimed CJRS grants owed will not be paid, they may give a notice making an individual (or individuals) jointly and severally liable for the relevant tax liabilities. This means that all individuals given a notice will be jointly and severally liable with the company for paying these liabilities.

HMRC have issued guidance setting out the conditions that need to be present in order to use their powers:

a. An officer of HMRC may give a joint and several liability notice to an individual if they are satisfied that all 4 of the conditions A to D set out in the legislation have been met

b. the company is subject to an insolvency procedure, or there is a serious possibility of becoming subject to one

c. the company is liable to an income tax charge as a result of receiving a COVID-19 support payment it was not entitled to receive

d. the individual was responsible for the management of the company at the time the tax first became chargeable, and the individual knew (at that time) that the company was not entitled to the relating COVID-19 support payment

e. there is a serious possibility that some or all of the income tax liability will not be paid

See: Overview of joint and several liability notices for the taxation of coronavirus (COVID-19) support payments - GOV.UK (https://www.gov.uk/guidance/overview-of-joint-and-several-liability-notices-for-the-taxation-of-coronavirus-covid-19-support-payments)