1001 Liability to tax, etc of holder of fixed charge on book debts of company

Summary

Where a person holds a fixed charge on the book debts of a company and that company fails to pay PAYE, VAT or local property tax for which it is liable, the holder of the fixed charge is, on notification in writing from the Revenue Commissioners, liable for that tax. The fixed charge holder’s liability is limited to amounts received (while the fixed charge is in existence) from the company in respect of all debts due to the holder by the company. However, where the fixed charge holder notifies the Revenue Commissioners of the existence of the fixed charge, the fixed charge holder’s liability is confined to the amount which the company fails to pay after the fixed charged holder has been notified by the Revenue Commissioners of any potential liability under this section.

Details

Definition

(1) The term “relevant amount” means any amount which the company is liable to remit under Chapter 4 of this Part (PAYE), the Value-Added Tax Consolidation Act 2010 and the Finance (Local Property Tax) Act 2012, that is, amounts which the company has collected from other parties on behalf of Revenue.

Liability of fixed charge holder

(2) Where a person holds a fixed charge (created on or after 27 May, 1986) on the book debts of a company and the company fails to pay any relevant amount for which it is liable, the fixed charge holder becomes liable to pay that amount on demand and on neglect or refusal to pay may be proceeded against in the same manner as any other tax defaulter.

(3) The holder of the fixed charge will not become liable for unpaid debts of the company who gave the fixed charge unless the Revenue Commissioners has been notified in writing by that a company has defaulted on PAYE/VAT/local property tax and that the fixed charge holder may become liable for any future default and, if subsection (3A) does not apply, has also become liable for the amount then in default.

(3)(A) Where, within 21 days of the creation of the fixed charge or, where the fixed charge has been transferred on or before 31 January 2020 or within 21 days of the date of transfer of the fixed charge (whichever is the later), the holder of the fixed charge furnishes in writing to the Revenue Commissioners the following details in relation to the charge:

1. the name of the company on whose book debts the charge has been created;
2. the registration number of the company as issued by the Companies Registration Office to that company;
3. the registration number of the company as issued by the Companies Registration Office to that company;
4. the tax registration number of the company as issued by the Revenue Commissioners to that company;
5. the date the fixed charge was created or transferred, as the case may be; and
6. the name and address of the holder of the fixed charge;

the liability of the fixed charge holder is confined to amounts which become due for payment by the company after the fixed charge holder has been notified of the fixed charge holder’s liability.

4(a) The fixed charge holder will not be required to pay more than the amount received from the company on foot of the fixed charge.

4(b) The liability of a fixed charge holder in accordance with this section is confined to amounts which become due for payment by the company after the fixed charge holder has been notified of the liability by Revenue.

Withdrawal of notification of liability

(5) The Revenue Commissioners may withdraw a notice of liability issued under this section, but this does not affect any liability of the fixed charge holder arising before the withdrawal nor the right of the Revenue Commissioners to issue a subsequent notice to the fixed charge holder.

Delegation

(6) The Revenue Commissioners may delegate their powers and functions under this section to nominated officers.

Relevant Date: Finance Act 2021