Tax Credits Act 2002 section 26

Liability of officers for sums paid to employers

Section 26 deals with the personal liability of company officers where an employer that is a body corporate fails to repay working tax credit funding to HMRC, and that failure is attributable to fraud or neglect by those officers.

• Where a corporate employer fails to repay working tax credit funding and HMRC attributes this to fraud or neglect by company officers, those officers become personally liable to repay the recoverable amount.
• Any payment made by a culpable officer must reduce the employer's outstanding liability, and if the employer subsequently makes payments that reduce the debt, the officer's liability must be reduced accordingly, with any overpayment refunded.
• Regulations may cover practical matters including requiring officers to pay in accordance with HMRC notices, apportioning liability among multiple culpable officers, charging interest on outstanding amounts, and providing a right of appeal.
• An "officer" is broadly defined to include directors, managers, secretaries, similar officers (or anyone purporting to act as such), and, where a company is member-managed, any member exercising or purporting to exercise management functions.

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