Company PAYE and NIC arrears
PAYE and National Insurance arrears arise when a company deducts tax and National Insurance from employees' wages but does not pay it over to HMRC, using the money for cash flow instead. HMRC views this seriously because, like VAT, the money was never really the company's to spend. Most company tax debts cannot be passed to directors personally, but PAYE and National Insurance are an area where there is more risk: HMRC can issue a Personal Liability Notice for certain unpaid National Insurance where there has been neglect or fraud by a director or officer. As with all tax arrears, the safe response is to file Real Time Information on time, contact HMRC early, and propose a realistic Time to Pay arrangement. If PAYE arrears are building because the company simply cannot afford its wage bill, that is a sign the business may need formal rescue or closure, and advice should be taken without delay. HMRC, gov.uk
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The personal-liability angle
Unlike most company debts, certain unpaid National Insurance can be pursued from a director personally through a Personal Liability Notice where there is neglect or fraud. That makes early action on PAYE arrears especially important. See HMRC debt for the wider picture.
The numbers behind this
See the live official figures on our HMRC tax debt tracker. The scale of tax debt owed to HMRC, PAYE included, and Time to Pay volumes. All figures come from named official sources on our UK business distress data hub.
Common questions
Can I be made personally liable for unpaid PAYE?
PAYE itself is generally a company debt, but HMRC can issue a Personal Liability Notice for some unpaid National Insurance where a director has been neglectful or fraudulent. Take advice if you are worried.