Have you recieved a HMRC Notice of Requirement to give security or bond? We are seeing an increasing trend of cases being criminally investigated, and in some cases, prosecuted for failing to pay a security or bond to HMRC. Typically the investigations arise in relation for failure to pay a security for PAYE, NI and VAT where HMRC are concerned that there is a risk of future loss.
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Notice of Requirement
Cases are not limited to these taxes but others are rarely prosecuted. In our experience these investigations and prosecutions come out of the blue for tax payers and/or their companies. They may have been spoken to by HMRC some 12 months previously with a request for security on a civil basis and moved on with their particular business interests and forgotten all about the issue, only to be invited to an interview under caution a year later. Given the technical nature of such allegations it is imperative for advice to be taken as soon as a notice is received, even if you cannot make the payment for security. Often the financial penalty is not the worry for an individual or their business (although this carries with it it’s own complications), but the very fact of a criminal conviction for matters often outside of their control, such as a failure of debtors, can be devastating for a business and / or the individuals concerned.
Early advice should be taken from the moment a security is requested. This includes considering whether the security has properly been requested in the first place. HMRC then has discretion as to whether to commence a criminal investigation and prosecution and in some cases it can be possible to make representations with a view to trying to divert HMRC away from this option. It must be stressed this is not always possible but seeking advice at an early stage increases the prospect that we may be able to secure a resolution for you and your business.
The particular legislation and regulations to look out for are:
- Schedule 11 paragraph 4 (2) (a) of the Value Added Tax Act 1994
- Section 72(11) Value Added Tax Act 1994
- Part 4 A Income Tax (Pay As You Earn) Regulations 2003
- Part 3B Schedule 4 to the Social Security (Contributions) Regulations 2001
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