Split over directors' NI debt avoidance

The profession is divided over the Contributions Agency’s increased powers to collect unpaid National Insurance.

In August, Peter Lilley, secretary of state for Social Security, announced that the personal assets of directors whose companies had gone into liquidation could be frozen if NI contributions were unpaid. The move was hailed by the Government as a crackdown on rogue directors who deliberately drove their companies to bankruptcy, avoiding NI debts, only to start up in business again.

But the profession has split over the announcement. Jim Yuill, director of social security services at Ernst & Young, backed the new powers for making it easier to chase ‘phoenix’ directors. ‘These (directors) are people who have collected contributions from employees. When their businesses go bust, they often start up again very, very quickly,’ he said. ‘This is a remarkable turnaround for the Government.’

But Mike Beattie, a general practitioner and insolvency practitioner from Northwood, Middlesex, attacked the extension of powers. ‘Nobody wants to defend people who repeatedly rip off the system,’ he said. ‘But these powers are extraordinary.’

The Contributions Agency could now act as ‘judge, juror, executioner and bailiff,’ he said.

Mark Spofforth, chairman of the General Practitioners Board, added: ‘We shouldn’t be concerned about extended powers if they are used sensibly.

But there is general concern about the increasing powers the Inland Revenue are taking under self-assessment.’