NIM12206 - NICs Personal Liability Notices (PLN): phoenixism

Section 121C of the Social Security Administration Act 1992 (SSAA 1992)

Phoenixism is a term used to describe the practice of carrying on the same business or trade successively through a series of companies where each becomes insolvent (that is, it can바카라 사이트檛 pay its debts) in turn. Each time this happens, the insolvent company바카라 사이트檚 business, but not its debts, is transferred to a new, similar 바카라 사이트榩hoenix바카라 사이트� company. The insolvent company then ceases to trade and might enter into formal insolvency proceedings (liquidation, administration or administrative receivership) or be dissolved. Only essential trade suppliers will be paid in full before the transfer, so that PAYE and National Insurance contributions (NICs) often remain deliberately outstanding.

It's important to note that not all phoenix companies are 바카라 사이트榬ogue바카라 사이트� companies.

In cases involving phoenixism and where there has been an underpayment of NICs, section 121C of the SSAA 1992 may be considered by HMRC, both in respect of any liquidated company and any current 바카라 사이트榣ive바카라 사이트� company that has an underpayment of NICs.

During the Parliamentary Debates on the introduction of the PLN legislation particular attention was paid to the problems associated with phoenix-type companies, with the government stating:

바카라 사이트淲e intend that the measure will be used primarily, although not exclusively, to catch phoenix-type directors who deliberately and repeatedly fail to pay contributions 바카라 사이트� and usually PAYE tax 바카라 사이트� and then put the company into insolvency, having made a personal financial gain.바카라 사이트�

Whilst not conclusive the following may indicate phoenixism and a potential PLN enquiry:

  • rapid build up of NIC debts
  • payment of selected debts e.g. trade creditors at the expense of HMRC liabilities
  • transfer of assets, or sale of the assets by the liquidator to a new company or connected officer of the company, possibly at a lower than expected value - this may include transfer of work in progress