Who bears the liability for a company's tax?

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Multiple Choice

Who bears the liability for a company's tax?

The company itself bears the tax liability because a company is a separate legal entity from its owners and managers. Corporate tax is charged on the profits of the company and is paid out of the company’s own funds. Shareholders aren’t personally liable for the company’s taxes just by owning shares, and directors aren’t normally personally liable for the company’s tax unless they’ve engaged in wrongdoing or failed in their duties, in which case penalties can fall on individuals in specific circumstances. Beneficiaries have no general obligation to pay the company’s tax. So, the liability sits with the company.

The company itself bears the tax liability because a company is a separate legal entity from its owners and managers. Corporate tax is charged on the profits of the company and is paid out of the company’s own funds. Shareholders aren’t personally liable for the company’s taxes just by owning shares, and directors aren’t normally personally liable for the company’s tax unless they’ve engaged in wrongdoing or failed in their duties, in which case penalties can fall on individuals in specific circumstances. Beneficiaries have no general obligation to pay the company’s tax. So, the liability sits with the company.

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