HMRC Tax Investigation – What to Do If You Receive a Notice of Requirement (NOR)?

Legally reviewed by: Laura Smith Apr 2026 In: Corporate & Financial Crime

If you or your business has received a Notice of Requirement to Pay Securities from HM Revenue & Customs (HMRC), Cartwright King’s team of tax investigation solicitors are on hand to provide the legal expertise you need.

Our highly accredited Corporate and Financial Crime team and our Regulation team have extensive experience handling HMRC investigations, offering tailored advice to resolve issues while safeguarding your business and personal interests.

If you have received a Notice of Requirement to Pay Securities, it’s important to speak to a specialist solicitor. Contact Cartwright King on 0345 894 1622 or complete our online enquiry form to arrange a callback.

What is a Notice of Requirement (NOR)?

A Notice of Requirement to Pay Securities is issued by HMRC when they believe there is a risk that an employer will not pay future Pay As You Earn (PAYE) or National Insurance contributions (NICs). It requires the employer to pay a lump sum in advance as a security. The relevant tax law for NORs is found in Part 4A of the Income Tax (Pay As You Earn) Regulations 2003 and Part 3B of Schedule 4 to the Social Security (Contributions) Regulations 2001.

Similarly, HMRC can issue a Notice to taxable persons if there is a significant risk they will not pay VAT due. This is covered under paragraph 4(2)(a) of Schedule 11 to the VAT Act 1994.

HMRC’s Internal Manual on NORs explains the criteria for issuing these notices.

Will HMRC Warn Me Before Receiving a Notice of Requirement?

Although it’s common for HMRC to send a warning letter in advice of a NOR being issued, this is not always the case. If HMRC believe that sending a warning letter might increase that risk of VAT, PAYE or NICs not being made, they may send a NOR without a prior warning letter.

What Information Does the Notice of Requirement Contain?

The information you receive should include three pieces of documentation. Firstly, the NOR’s accompanying letter which will include information pertaining to:

Why HRMC require the security,
How they arrived at the set amount,
Information regarding joint and severable liability,
Your rights regarding the request time to pay the NOR.

Secondly, the Notice of Requirement documentation will explain:

HMRC’s power to require security,
The amount of security they require,
The date on or before security is to be given,
How long HMRC will hold the security,
The names of all the other persons who have been given an NOR requiring them to give security jointly and severally,
The means by which security can be given,
What happens if they fail to provide security,
The person’s right of appeal.

Finally, the NOR will also be accompanied by a factsheet. For more examples of these factsheets, the HMRC has provided the following: securities in respect of PAYE and NICs, and securities in respect of VAT at risk.

How Long Do I Have to Pay the Security?

Although VAT securities must be paid immediately by law, HMRC typically allows a reasonable period for payment.

For PAYE and NICs, the security must be paid by the deadline that is specified in the Notice of Requirement, This will be at least 30 days from the date the notice is received.

If you require additional time to pay the security, HMRC’s internal manual on time to pay requests states that the employer can request time to pay their VAT and PAYE/NICs liabilities. This is providing the request is submitted before the date that HMRC originally states they require the security.

Any requests for additional time to pay should be made in writing. The request will be considered by the Debt Management and Banking team (DMB).

The DMB team will notify you whether the request is accepted or not. If the request is denied, you have 31 days to provide security or appeal against the NOR, if you have not done so already.

It’s important to note that currently there is no right of appeal against the time to pay decision. Therefore any right of appeal must be solely made against the request for security.

What if I Don’t Pay Security for VAT?

It is a criminal offence to make or receive taxable supplies without providing the security specified in a Notice of Requirement. If HMRC discovers that taxable supplies are being made without the required security, you can be prosecuted resulting in a fine of up to £20,000 for each taxable supply made without the security.

Furthermore, anyone involved in the business may face personal prosecution, making them individually liable for fines and any court-ordered compensation.

To avoid prosecution, the required security must be provided in full.

What Happens If Security for PAYE and NICs Is Not Paid?

The employer is liable to pay the security for PAYE or NICS.

For limited companies or limited liability partnerships (LLPs), HMRC may require security from one or more directors, partners, or any individual who controls the organisation and can influence whether PAYE and NICs are paid. If multiple individuals are in a position to influence these payments, each is held jointly and severally liable. This means they are all collectively and individually responsible for the full security amount.

Not providing the required PAYE and NICs security is a criminal offence and HMRC can prosecute if the security is not paid in full.

If prosecuted successfully, the court can impose an unlimited fine, with the exact amount determined at its discretion. Therefore to avoid prosecution, the employer must pay the security in full.

Can I Apply For a Reduction in the Security?

Individuals who have provided security for PAYE and NICs can request a reduction in the security amount if their circumstances have changed. Valid reasons for a reduction include:

Experiencing financial hardship
No longer being the employer in the business
A significant reduction in the workforce
Ceasing to be an employer entirely

If the application is approved, HMRC may refund part or all of the security.

For VAT security, the only way to seek a reduction is through the appeal process outlined below.

How Are Securities Calculated?

VAT Securities

HMRC calculates VAT securities as follows:

The VAT amount paid or due for a 4-month period (for businesses filing monthly returns) or a 6-month period (for businesses filing quarterly returns),
Any arrears of VAT currently owed by the business. These arrears remain payable, and HMRC will continue pursuing them separately.

PAYE and NIC Securities

For PAYE and NICs, HMRC calculates securities based on:

The amount of PAYE and NICs paid or due for a 4-month period,
Any current arrears of PAYE and NICs. These arrears remain payable, with HMRC continuing efforts to recover them.

How Long Does HMRC Hold Securities?

VAT Security: HMRC typically holds VAT security for at least 12 months for businesses filing monthly returns and 24 months for those filing quarterly returns.
PAYE/NIC Security: HMRC generally holds PAYE/NIC security for 24 months while monitoring the business’s tax compliance.

The security will be returned once HMRC determines there is no longer a risk of non-payment.

If necessary, HMRC may use the security to settle outstanding VAT, PAYE, NICs, or other debts owed to them.

How to Appeal a Notice of Requirement Decision

You can request a review of the Notice of Requirement (NOR) within 30 days of its issue. A review is recommended if you believe important facts have not been considered or if you can provide new information that might change HMRC’s decision.

You can appeal to an independent tribunal within 30 days of the NOR or within 30 days of the review decision.

Important Note: If you continue to make or receive taxable supplies without providing the required security while your appeal is pending, you may still face prosecution. However, HMRC may choose to delay prosecution until the tribunal has made its decision.