The judge ruled that the company failed through no one’s fault. The Tax Agency still claims the company’s debts from you, and can collect them against your home.
In Presumed Innocent, Harrison Ford is Rusty Sabich, a brilliant prosecutor who from one day to the next finds himself in the dock. There is no confession and there are no witnesses. It is enough that he was there: he held the post, he had the relationship, he had the keys. And just when the viewer thinks the nightmare is over, the film still has one last twist in store.
Many company directors live through their own version, and the final twist is not written by any screenwriter: it is written by the Spanish Tax Agency.
The first happy ending
The company runs into difficulties and the director does what the law requires: he files for insolvency. Years later, the judge concludes that the failure was accidental, through no fault of those who ran the business. The director breathes again. He believes he has been acquitted. Fade to black.
But the closing credits never roll. What arrives instead is a letter from the tax authorities: a derived liability decision. From that moment, the company’s tax debts are his too, and the authorities can collect them by seizing his salary, his bank accounts or his home.
Two different films
How is that possible, if the judge said there was no fault? Because the insolvency and the derived liability claim are two different films, with different scripts. The insolvency judge decides why the company became insolvent and whether those who ran it caused or worsened the situation. The tax authorities ask a different question: whether the director did what was necessary for the company to pay its taxes, whether debts were left outstanding when it closed, or whether he took part in the company’s infringements. What is decided in one does not bind the other.
And the tax authorities know it. A no-fault finding in the insolvency does not prevent them from pursuing the director, and the courts have confirmed this in a great many judgments. It is the law, and the Tax Agency applies it.
More and more derived liability claims
What we see at the firm is that derived liability claims have multiplied in recent years. When the company does not pay, the tax authorities look for the person: the director, jointly or secondarily liable depending on the case, ends up answering with his personal assets for a debt that was never his. It is, quite simply, chilling. But it is legal, and it happens every day.
How the ending is written
That the tax authorities can pursue the director does not mean they can always do it properly. There is a defence, but it is not in the insolvency judgment: it lies in the requirements of the derived liability claim itself. One has to check that the company has been formally declared unable to pay, that the debts were outstanding when it ceased trading, that the authorities describe precisely what that director did or failed to do, and that the dates, the amounts and the time limits add up. Many claims fail on exactly those points.
Rusty Sabich learned that an acquittal is not the end of the film. Directors should know it too, before signing the insolvency petition, not afterwards. Do you know how much of your company’s debt could end up in your name?