CISR16173 | The Scheme: primary legislation: section 72B

From HM Revenue & Customs · Construction Industry Scheme Reform Manual

Section 72B explains when HMRC can make company officers personally liable for all or part of a penalty charged to their company under FA04/S72A.

Sub-section 72B(1) allows HMRC to issue a decision notice to the officer, specifying the portion of the penalty (up to 100%) they must pay, when a company is liable to a penalty under section 72A, and the actions that led to the penalty were attributable to an officer of the company.

However, an officer is not liable under this section if the company’s actions were attributable to conduct for which the officer has been convicted of an offence: FA04/S72B(6).

Before issuing a decision notice HMRC must inform the officer that this is being considered, and give the officer an opportunity to make representations on whether a notice should be given or the portion that is specified: FA04/S72B(2).

A decision notice cannot be issued until the company’s penalty amount has been determined and it must be issued within 3 years of the underlying penalty under FA04/S72A(1) becoming final: FA04/S72B(3).

The specified amount must be paid within 30 days of the notice and is recoverable as if it were tax due from the officer. HMRC may issue further decision notices for additional penalties: FA04/S72B(4).

HMRC cannot recover more than 100% of the penalty when issuing notices to more than 1 person: FA04/S72B(5)

For this section and FA04/S72C

Content shown with reduced fidelity

Company includes a body corporate or unincorporated association. Officer means: For a body corporate other than one whose affairs are managed by its members: Directors, managers, secretaries, or similar roles, shadow directors (Companies Act 2006 definition, section 251) For LLPs or other corporate bodies whose affairs are managed by its members: Members exercising management functions, For LLPs: Shadow members which are persons in accordance with whose directions or instructions the members of an LLP are accustomed to act. A person is not a shadow member by reason only of the fact that the members act on advice given by that person in a professional capacity. For unincorporated associations: Persons exercising functions of management with respect to it, or purporting to do so.