What is a notice of requirement?
If you have failed to pay a bill to HMRC on time they may ask for a bond or deposit as security to settle it. In this instance they will send a notice of requirement which will state:
- How much is due;
- When the payment must be made; and
- Different ways in which you can pay.
Usually a notice of requirement will not be sent in the first instance. HMRC will provide a warning first unless they feel there is a real risk that doing so will make you less likely to pay the taxes owed.
Receiving a notice of requirement should not be taken lightly as it is one of the only HMRC 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 requested sum.
What are the consequences of not providing the security to HMRC?
| Tax, Duty or Levy | Consequence |
| PAYE deductions Class 1 national Insurance contributions | 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 |
| 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 |
| Machine Games Duty | 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?
| Tax, Duty or Levy | How long HMRC can keep the security? |
|---|---|
| PAYE deductions Class 1 National Insurance contributions | 2 years, however once HMRC believe there is no risk of you not paying your tax on time, they will return the security sooner. |
| VAT Landfill Tax Aggregates Levy Climate Change Levy Insurance Premium Tax Machine Games Duty General Betting Duty Pool Betting Duty Remote Gaming Duty | 12 months for a business on monthly returns 2 years for a business on quarterly returns HMRC will return the security sooner if they think there’s no longer a risk you won’t pay on time. |
| Air Passenger Duty | HMRC will keep the security for as long as they feel there is a risk you won’t pay on time. |
Can I appeal the notice of requirement?
Yes. We have a proven track record of successfully appealing securities following a notice of requirement from HMRC and preventing them instigating criminal proceedings against directors. Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and advice which can make a pronounced difference to eventual tax penalties, charges and liability.
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 their 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:
i. HMRC can offer an internal review of the disputed decision (note that you can request this at any time). The review is an entirely internal procedure completed not by the original HMRC decision maker but by a different HMRC officer.
ii. A taxpayer can appeal to the First Tier Tax Tribunal if the taxpayer cannot agree their position following the review. The independent tribunal will make a determination on the case. A further appeal is permitted if a taxpayer does not agree with the decision.
More detailed guidance on HMRC Penalty Appeals can be found: here.
Expert London Tax Appeal Lawyers
We can help you at every stage of the HMRC appeal process. Our legal team has first-hand experience and knowledge of how HMRC works at every level, in particular in relation to their legal and complaints teams.Â
We provide the very best representation in negotiations with HMRC and defending all allegations in a tax enquiry, tax fraud investigation, criminal tax evasion or similar investigation.
We have a track record of successfully challenging HMRC decisions and will assist you and appoint forensic support where necessary to provide expert reports. Unlike accountant tax advisers we analyse the merits at the outset and keep them under review and we won’t have to hand over all your confidential data as lawyers have legal advice privilege unlike accountants.
We provide tax advice and representation against HMRC. Get in touch with our expert tax solicitors and barristers so we can get you a result. We provide a quick no cost initial telephone case review to establish whether or not we can help you; just call one of our team on 02071830529.