Inland Revenue is demanding my company’s PAYE, am I personally liable?

PAYE deductions withheld from employees' wages are treated seriously because they are considered to be held on trust for the Crown. Under the Tax Administration Act 1994, in normal circumstances, a company's tax debts are the company's liability, and directors are not automatically personally liable simply because they are a director. However, directors can become personally liable in certain situations, for example where deductions were knowingly not paid over, in cases involving fraud or knowing participation in a breach of duty, or if there has been a director's penalty type mechanism used, and directors can also face liability under the Companies Act 1993 for reckless trading if the company continues operating while unable to meet its obligations, including tax debts. Engage with Inland Revenue promptly, consider an instalment arrangement and seek advice about the company's overall financial position, including insolvency options if it cannot recover.