HMRC has a new weapon. In May 2026, it signed a £175 million, ten-year contract with Quantexa, a British AI firm, to deploy decision-intelligence technology across its entire enforcement operation. At the same time, the number of Joint and Several Liability Notices — JSL Notices — issued to individual directors is rising sharply. And a February 2026 First-tier Tribunal decision has fundamentally shifted the legal ground beneath them.
If you sit on the board of a company that has ever been through financial distress, a restructuring, or a pre-pack administration, this matters to you personally. Not to your company. To you.
What Is a Joint and Several Liability Notice?
A Joint and Several Liability Notice (JSLN), introduced by Schedule 13 Finance Act 2020, is one of the most powerful enforcement tools in HMRC’s arsenal. It pierces the corporate veil. It makes you — as an individual director, shadow director, or person with significant influence — personally liable for your company’s unpaid tax, national insurance contributions, and related penalties.
JSL Notices can be issued in three broad circumstances:
- Tax avoidance or evasion: Where HMRC believes the company engaged in avoidance arrangements or evasive conduct, and you were involved.
- Repeated insolvency and non-payment: Where you have been connected to two or more companies in the prior five years that became insolvent with unpaid tax liabilities, and a new company is carrying on a similar trade.
- Facilitating tax avoidance: Where a penalty has been issued to the company for facilitating avoidance, including breaches under DOTAS or POTAS.
The repeated insolvency condition is the most expansive — and the most dangerous for directors of restructured groups. You do not need to be a fraudster to be caught by it. You just need to have been a director of two entities in a group that went through an insolvency procedure, even a perfectly legitimate pre-pack, with unpaid tax liabilities above £10,000 that represent more than 50% of unsecured creditor exposure.
According to Menzies LLP’s analysis of HMRC’s own FOI responses, the number of JSLNs issued has been growing rapidly: 16 in 2022/23, 53 in 2023/24, 34 in 2024/25 — and that 2024/25 figure is expected to be revised upward, with volumes forecast to accelerate sharply as the six-year limitation window on pandemic-era insolvencies closes.
The Tribunal Decision That Changes Everything: James Hall v HMRC [2026] UKFTT 124 (TC)
In February 2026, the First-tier Tribunal delivered a landmark ruling in James Hall v HMRC [2026] UKFTT 124 (TC). Hall was a director of three insolvent companies with combined outstanding tax liabilities exceeding £1.6 million. HMRC issued a JSLN making him personally liable. He appealed.
The Tribunal held that a JSLN constitutes a criminal charge for the purposes of Article 6 of the European Convention on Human Rights. This has a single, seismic consequence: the burden of proof shifts from the individual to HMRC.
Under the previous framework, JSLNs carried a quasi-strict liability character — once issued, the onus was on the director to dislodge the notice. After Hall, HMRC must establish a prima facie case for both issuing the notice and maintaining it. That is a materially higher bar. As Howard Kennedy’s dispute resolution team has observed, this ruling is expected to be deployed as a new line of defence in JSLN correspondence and Tribunal proceedings from the outset — not just as a last resort.
HMRC will almost certainly appeal this decision to the Upper Tribunal. Until it does, or until the Upper Tribunal overturns it, Hall represents the current legal position. Any director currently under a JSLN should be reviewing this with specialist counsel immediately.
A Second Line of Defence: Abuse of Process (Trees v HMRC [2026] UKUT 92 (TCC))
Separately, the Upper Tribunal in Ashley Charles Trees v HMRC [2026] UKUT 92 (TCC) — analysed by RPC’s tax disputes team — set aside a Director’s Liability Notice worth approximately £2 million on grounds of abuse of process and material procedural unfairness.
HMRC had sought to rely on findings from earlier litigation to establish dishonesty — but in those earlier proceedings, dishonesty had never been properly pleaded. The Upper Tribunal refused to allow HMRC to piggyback on that litigation. The notice was set aside in full.
The lesson: HMRC’s procedural conduct is not immune from scrutiny. Where allegations of dishonesty or fraud are central to a JSLN or Personal Liability Notice, those allegations must be properly particularised from the outset. Procedural shortcuts create appellate vulnerabilities.
Why AI Makes This More Urgent, Not Less
Here is the uncomfortable reality. The fact that Hall shifts the burden of proof onto HMRC, and that Trees illustrates HMRC’s procedural vulnerabilities, does not reduce the threat. It may increase the volume of notices issued while HMRC works through the legal consequences of Hall at appeal.
The £175 million Quantexa contract, announced in May 2026, deploys a Decision Intelligence Platform that connects HMRC’s fragmented internal datasets with Companies House, Land Registry, bank and financial institution data, offshore exchange records, and open-source and e-commerce data. It processes millions of tax returns annually, identifies network patterns, and flags anomalies for human review. As Technology Magazine reported, HMRC’s first Chief AI Officer, James Mitton, has been appointed to oversee deployment.
The system does not make final decisions — a human officer must sign off. But the identification and prioritisation of cases is increasingly algorithmic. That means edge cases that a human claims-handler might deprioritise may now be surfaced automatically. The Menzies FOI data showing 53 notices in 2023/24 is a floor, not a ceiling.
For directors who were involved in pandemic-era restructurings — pre-packs, CVAs, administrations — the six-year limitation window on many of those insolvencies is closing. The AI is, in part, being deployed to work through that backlog before the clock runs out.
The CFO’s Practical Risk Inventory
Against this backdrop, every CFO and finance director who has served on the board of a company that went through financial distress since 2020 should be running a personal risk assessment. Here is the framework:
- Map your historical directorships. Identify every company you were connected to in the past six years. Were any subject to insolvency? Did any have unpaid HMRC liabilities? Were those liabilities more than £10,000 and more than 50% of unsecured creditor exposure?
- Check for new company connections. Are you currently connected to a company carrying on a similar trade to any insolvent predecessor? The repeated insolvency trigger requires a live “new company” connection as well as the historic insolvencies.
- Review group structures. JSLNs can catch directors of holding companies whose subsidiaries went through insolvency. Compartmentalised group structures, particularly in retail, hospitality, and property, are a known HMRC focus area.
- Audit your COVID-19 support scheme exposure. JSLNs relating to fraudulent Bounce Back Loan, CBILS, or CJRS claims can be issued regardless of the accounting period. If your company received government support and there was any irregularity in how it was claimed or applied, this is a live risk.
- Engage proactively if you have received any HMRC correspondence about historic liabilities of companies you were connected to. The 30-day window to request an internal review after a JSLN is issued is non-negotiable. Missing it forfeits important rights.
- Instruct specialist tax disputes counsel early. The effectiveness of both the Hall Article 6 defence and the Trees abuse-of-process defence depends on expert legal engagement from the outset. These are not arguments you want a generalist to raise for the first time at Tribunal.
What the Combination of Hall, Trees and Quantexa Means for Corporate Governance
There is a broader governance point here that boards should not miss. The HMRC guidance on JSLNs is publicly available and makes the triggering conditions explicit. Any competent CFO advising a board through a restructuring should now be ensuring that the JSLN risk is formally assessed, documented in board minutes, and considered in any D&O insurance review.
This is not hypothetical exposure. HMRC issued 53 notices in a single year. With AI-assisted case identification, that number is likely to multiply. The Hall decision is welcome, but it does not make the threat disappear — it creates a new line of legal defence that requires expert deployment. The Trees decision reminds HMRC that its procedural conduct matters, but most directors will not have the resources to fight a years-long Tribunal process without significant professional support.
The practical takeaway is straightforward: the corporate veil has been thinning since 2020. AI is accelerating the pace at which HMRC identifies candidates for piercing it. And the case law, while moving in a helpful direction for defendants, requires proper legal engagement to be effective.
Do not wait for the letter to arrive. Do the audit now.