PAYE and VAT security notices

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Our specialist PAYE and VAT security notice team

Our firm has a brilliant range of experience on tax related claims.

• Andy Lynch is a partner whose experience prior to joining FWJ included 18 years at HMRC working for their National Tax Investigations Team. He has undertaken a significant amount of PAYE and VAT security notice defence work.
• Stephen Downie is a partner with significant tax experience and is also a qualified accountant and previously spent time working at the Insolvency Service.
• Pembe Ramadan previously spent 6 years at HMRC as an in house litigator. Pembe is a qualified Civil and Commercial Mediator and has attended over 60 First Tier Tax Tribunals during her career.
• Anita Sharma who is highly experienced in HMRC claims, often involving complex tax litigation, COPP 9 investigations, PAYE and VAT security notice defence, tax investigations, appealing HMRC decisions and dealing with matters in the Tax Tribunal.
• Phoebe Pexton who specialises in a range of cases, such as tax investigations, Code of Practice claims and R&D tax credit defence.

Overview

In the majority of company insolvencies, HMRC are owed VAT and PAYE.

Where a director or individual has had previous business failures and HMRC were left unpaid, it might insist that security be given in any new business venture to reduce HMRC’s exposure to further bad debt should the new company fail. HMRC do this by issuing a notice of requirement (NOR).

Notice of requirement

HMRC may issue a notice of requirement for various reasons, including:

• where a director or individual has had previous company failures with VAT or PAYE debt:
• where a director or business has deliberately failed to pay VAT or PAYE:
• where a director or individual has a history of not paying VAT or PAYE on time:
• where a business is purchased via the pre-pack administration process:

A notice of requirement will be served on the company care of its directors, and it will state the fixed sum required to be paid as security for future VAT or PAYE obligations. The notice will also state how long HMRC wish to hold the deposit for.

In relation to VAT, this security is calculated on the basis of current estimated earnings and on the basis of the arrears due from the predecessor company, often meaning that the VAT Security required is very large and is often on the basis of a much higher level of trading by the predecessor company or business.

The VAT security is normally held for a minimum of between 12-24 months and, once HMRC considers there is no ongoing risk, will be returned.

Consequence of failure to comply with a notice of requirement

In the event you do not respond to the notice of requirement, and/or do not pay the VAT Security amount required, then HMRC may institute prosecution proceedings against the directors.

The prosecution may lead to a fine of £5,000 (under the tax legislation as of writing) for “each taxable supply” meaning that this could be for every VAT invoice issued. 

Options available to you

At all times we would recommend engagement with HMRC to discuss such issues as soon as possible and upon receipt of any warning letter received.  In some instances, an appeal can be lodged and this needs to be made within 30 days of receipt of the Notice of Requirement. We would encourage early advice to identify whether a valid challenge or appeal can be raised with HMRC.

Delay in responding is often a pre-curser to much more serious problems.

At Francis Wilks & Jones we have considerable experience of assisting directors and business owners with dealing with VAT or PAYE Notice of Requirements. Should you require any assistance, please contact our Tax Dispute team who can discuss such matters with you.

If your enquiry is urgent, contact Partners Andy Lynch or Stephen Downie today and they will be happy to speak to you.

“FWJ did precisely what it set out to do. I am extremely grateful for its assistance.”

A client who had received a Request for Security from HMRC for a sum that would have caused their company severe financial difficulties. We helped them to have the entire bill withdrawn