Section 323
Section 323: liability of directors of a private company
Section 323 pierces the corporate veil for tax recovery purposes: if a private company (or a company that was private during the relevant year) cannot pay tax it owes, every person who was a director during that year becomes personally liable - unless that director can show the company's failure to pay was not due to his own gross neglect, misfeasance or breach of duty.
When directors become personally liable
Irrespective of the Companies Act, 2013, where tax due from a private company for any tax year's income - or from any other company for income of a year during which it was a private company - cannot be recovered, every person who was a director of the private company at any time during the relevant tax year is jointly and severally liable for payment of that tax.
A director escapes this liability only by proving that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the company's affairs.
"Tax due" is broadly defined
For the purposes of Section 323, "tax due" includes penalty, interest, fees or any other sum payable under the Act.
Frequently asked questions
Are all directors of a private company automatically liable for its unpaid tax?
Every person who was a director during the relevant tax year is jointly and severally liable by default under Section 323(1), but a director can escape liability by proving the non-recovery was not attributable to his own gross neglect, misfeasance or breach of duty.
Does "tax due" under Section 323 include interest and penalty, or just the base tax?
It includes penalty, interest, fees, or any other sum payable under the Act, in addition to the tax itself - as defined in Section 323(2).
Does this apply to a company that is public now but was private when the tax became due?
Yes - Section 323(1)(b) extends the same director liability to any other company, for income of a tax year during which that company was a private company.
Related sections
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Get help with director tax liability for private companiesLast updated 9 September 2026