Security in relation to HMRC taxes
16 May 2017: HM Revenue & Customs (“HMRC”) may ask for a deposit or bond if they think there’s a risk you won’t pay your tax or duty on time. They call this a security and if you don’t pay your bill HMRC can use the security to settle it. HMRC won’t accept property or other high value items as a deposit.
HMRC will ask you for a security in a legal document called a Notice of Requirement. This will show:-
- how much you must pay
- when you must pay it by
- the different ways you can pay
HMRC will normally warn you first unless they think there’s a risk it will make you less likely to pay your tax. Where directors have had failed companies with significant HMRC debt and they are setting up in business again, they might be seen as higher risk and so the likelihood of security being requested is greater. The most common types of security requested are for PAYE and VAT liabilities but they can cover all types of tax. Security can be valued at up to two years’ worth of the estimated tax liability and must be paid in full and up front.
If you do not pay the security requested then you are committing a criminal offence if you continue to provide taxable supplies and/or employ staff (i.e. whatever activity generates the tax liability where security is being sought). You have 30 days to challenge the request for security from the date of the Notice of Requirement and you may also request an independent tribunal to consider the request for security therefore haste is paramount if you are to mount a well drafted challenge.
If you have received a Notice of Requirement please do get in touch with BRI Business Recovery and Insolvency so that we can assist you in exploring the options available and find out which is best for you so that you can move forward and, most importantly, focus on growing your business.