0161 883 2120

Notice of requirement

Requirement to give Security for VAT,  PAYE, or NICs.

If you or your business have failed to pay VAT or PAYE/NIC on time then HMRC may demand a bond or deposit as security to settle future tax liabilities. HMRC ask you to pay the security as they consider there is a risk that in the future you will not pay your tax on time. If you then do not pay your tax bill HMRC use the security to settle it.

If you receive a Notice of Requirement (NOR) you should act promptly and take specialist advice. You need to be aware that HMRC have the power to issue personal liability demands on directors and to refer unpaid security notices to the Crown Prosecution Service for prosecution resulting in substantial fines and criminal record for the director(s).

The HMRC Securities Team sends Notice of Requirement letters to both the relevant limited company and the directors personally making each jointly and severally liable for the security notice.

The NOR to give security is a formal written notice issued by HMRC to a taxpayer that it requires security from by a specified date. If the NOR security is not paid it can lead to criminal liability. Usually, but not always, HMRC provides a warning first, unless they feel there is a real risk that doing so will make you less likely to pay the taxes owed.

A NOR to give security states:

  • The amount that is due;
  • The time by which the amount due must be paid; and
  • The available modes of payment.

HMRC can request 4-6 months of payments up front, plus an amount equal to the current arrears.

Find out more about the Solve VAT appeal specialists call 0161 883 2120.

Is it a Criminal Offence? 

  • It is a criminal offence to continue to make or receive taxable supplies without giving the security shown on an NOR.
  • Receiving an NOR is a matter not be taken lightly as not complying with requirements that if not adhered is a criminal offence. Similarly, in not responding to the notice a director of a limited company may become personally liable for the due amount requested.
  • If you have received an NOR and you continue to make taxable supplies without giving the security in full, you may be prosecuted. In the event of a successful prosecution, you may have to pay a fine of up to £20,000 for each taxable supply you make without giving the security.
  • If you are involved in a business that continues to make or receive taxable supplies without giving the security, you may be prosecuted along with each individual involved in that business. You may also be personally responsible for paying any fines and compensation awarded by the court.

What happens if you don’t pay a HMRC Security Notice?

  • PAYE is HMRC system to collect Income Tax and National Insurance from employment & Class 1 National Insurance contributions (paid by the employer) on benefits and expenses to their employees and qualifies them for other state benefits; it is a criminal offence not to give the security in full. In this instance, the HMRC can take you to Court and they may fine you up to £5,000.
  • For VAT, Landfill Tax, Aggregates Levy, Insurance Premium Tax & Climate Change Levy; It is a criminal offence not to give the security in full. HMRC can take you to Court and they may fine you up to £5,000 for each taxable supply made.
  • In case of an NOR sent for Machine Games Duty, the HMRC have the ability to take away your registration and if you are not yet registered anyone in a business contract with you may become liable to pay your duty.

How long can HMRC keep the security following a notice of requirement?

  • In the case of an NOR for PAYE or Class 1 National Insurance contributions, the HMRC may retain your security for 2 years. Once HMRC believe there is no risk of you not paying your tax on time, they will return the security sooner.
  • For VAT, Landfill Tax, Aggregates Levy, Insurance Premium Tax & Climate Change Levy; 12 months for a business on monthly returns or 2 years for a business on quarterly returns
  • For Machine Games Duty, HMRC will return the security sooner if they think there’s no longer a risk you won’t pay on time.

The HMRC Appeal Process

If you disagree with HMRC’s notice of requirement, there is a 2-stage process to dispute their decision:

Stage 1: Give notice of appeal to HMRC. This must be done in writing within 30 days of HMRC’s notice of requirement. HMRC will confirm their first decision, amend their decision or agree with the your assessment.

Stage 2: If your position cannot be agreed with HMRC in stage 1 then you have two further options:

  1. HMRC can offer an internal review of the disputed decision (note that you can request this at any time). The NOR review is an entirely internal procedure completed not by the original HMRC decision maker but by a different HMRC officer.
  2. A taxpayer can appeal to the First Tier Tax Tribunal if the taxpayer cannot agree their position following the NOR review. The independent tribunal will make a determination on the case.

Links to HMRC information concerning a notice of requirement below:

https://www.gov.uk/hmrc-internal-manuals/securities-guidance/sg42100