§ Mr. Woodasked the Secretary of State for Social Services whether he has completed his examination of personal liability of directors for national insurance contribution debts for their companies.
§ Mr. FowlerI have examined carefully the special power contained in section 152(4) of the Social Security Act 1975, under which directors can become personally liable for the national insurance contribution debts of their company if they knew or should have known that the contributions were not being paid.
This power is not conferred on other revenue-collecting Departments. It has been criticised on the grounds that its use can result in exceptionally harsh personal financial penalties in certain circumstances; and that it may be a disincentive to directors to strive to save their companies, or may discourage the appointment of new directors where this might be in the interests of a company in difficulties.
I have decided that the use of section 152(4) is no longer justified and I intend to repeal it as soon as a suitable opportunity arises. This will bring my Department's powers into line with those of other revenue-collecting Departments, and it is my intention to keep in step with them in future.
From the date of this announcement, I propose to take no further action in any case in which my Department is currently involved.