Recovering wrongly-claimed Covid-19 support scheme payments

HMRC has now released its guidance on recovering wrongly-claimed COVID-19 support scheme payments and its approach in influencing those who see insolvency or dissolution as a way of avoiding tax due on COVID-19 support payments.

Under recovery powers in force, HMRC can look to issue joint and several liability notices to directors, shadow directors and certain other individuals connected to a company to recover outstanding liabilities owed.

What does joint and several liability mean?

A joint and several liability notice will make individual(s) jointly and severally liable for amounts the company owes to HMRC.

Therefore, where HMRC consider a company (including limited liability partnerships) is insolvent or is about to become insolvent, and the amount owed will not be paid, HMRC can look to issue a joint and several notice(s) 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.

Under this process, it does not matter who pays or how much each individual pays as long as the full amount is paid. HMRC will look to pursue all individuals for the liabilities due, including taking debt recovery action where necessary.

Joint and several liability notice conditions

For HMRC to issue an individual with a joint and several liability notice there are four conditions (A to D) set out in legislation that must first be satisfied.

A summary of these conditions is:

Condition A

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

Condition B

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.

Condition C

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.

Condition D

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

Review and Appeals

In addition to setting out the reasons why each condition has been met and the amount of tax liability due, the joint and several liability notice must also offer the individual a review by HMRC, including how the process works and explaining the individual’s right of appeal.

An individual has 30 days to accept the offer of a review and must do so in writing. HMRC must then carry out that review within 45 days unless a different period has been agreed between both parties.

If an individual wishes to appeal the notice, that appeal must be made to the First-tier Tribunal within specified time limits. However, an individual cannot accept an offer of a review whilst appealing to the tribunal at the same time.

In certain instances, an individual can also appeal in respect of the company’s liability and take part in an appeal hearing.

There are safeguards built into the legislation which allow for HMRC to withdraw a joint and several liability notice given to an individual, either if any of the relevant conditions were not met when the notice was given, or it is no longer needed for the protection of liabilities.

HMRC can also withdraw a notice in other cases where it is considered appropriate and may vary the amount specified if it transpires that the amount is, or has become, too much or not enough.

If you or your business has received a joint and several liability notice and you wish to discuss this matter, please contact the Guild to speak with one of our experts for a free consultation.

GuildHUB is an information resource, provided free of charge by The Guild, for accounting professionals and their clients.  If you wish to contact The Guild, please email

The content of this article is for guidance only and shall not constitute advice. Please seek independent advice or contact GuildHUB for information about its services.


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