Policy paper

Tax fraud warning: Attempts to use ‘Bills of Exchange’ to pay HMRC

Published 13 May 2026

Introduction

HM Revenue and Customs (HMRC) has seen an increase in customers attempting to use ‘Bills of Exchange’ to pay a tax liability. We are aware that there are promoters, particularly in the recruitment and temporary labour sector, marketing their use.  Organised Crime Groups are also particularly active in these sectors.

This briefing sets out HMRC’s position regarding the use of ‘Bills of Exchange’. Its purpose is to help you stay clear of these arrangements if you are approached by a promoter of a Bills of Exchange scheme claiming that these are valid forms of payment to HMRC and are legal under the Bills of Exchange Act 1882.

While Bills of Exchange or promissory notes may be accepted elsewhere, HMRC does not accept Bills of Exchange or similar private instruments as payment of tax liabilities. Bills of Exchange cannot be used against a tax debt. Tax liabilities must be settled using HMRC’s normal payment methods.

What is a Bill of Exchange?

A Bill of Exchange is defined in the Bills of Exchange Act 1882. It is a note from one person to another, requiring that person to pay a certain sum of money to them or to a third party. However it is up to the recipient to decide whether or not to accept the Bill as a form of payment. Even when the Bill has been drawn up according to the legislation, the recipient has no legal obligation to accept it. HMRC does not accept Bills of Exchange against a tax liability.

Further information on Bills of Exchange can be found on GOV.UK.

How are they marketed?

Promoters claim that a Bill of Exchange can be used to wipe out an HMRC debt. They offer to manage the process for customers, particularly payroll providers, and act on the customer’s behalf drawing up any affidavits and engaging with HMRC.

In addition to ‘Bills of Exchange’, other forms of wording in promotional material may include reference to money orders, Public Trusts, Merchant Law or Negotiable Instruments.

Promoters may also claim  that using Bills of Exchange can avoid the new umbrella company legislation which was introduced from April 2026. This is not true. Details of the changes to Income Tax rules to tackle non-compliance within umbrella companies can be found on GOV.UK.

In some cases, promoters may claim that the use of these arrangements are accepted or unchallenged by HMRC, or that the arrangements have been approved by Kings Counsel (KC). This is not the case.

Why you should not use these arrangements

Using these arrangements could significantly cost your business, not only through paying the promoter to use or facilitate their payment model, but also additional interest, penalties or fees that may be charged by HMRC where a debt is not fully paid on time.

Where customers attempt to use Bills of Exchange or promissory notes and refuse to pay the amount owed using HMRC’s usual payment methods, HMRC will use its enforcement powers to collect any outstanding amounts.

This has recently been tested in the courts in the winding-up of a company, where the court accepted that the money orders or Bills of Exchange offered to HMRC in payment of the company’s liabilities were not valid payment.

What you should do

You should always undertake your own robust due diligence.

You should seek independent professional advice before signing up to any schemes that suggest you will make a tax saving.

You should not rely on the fact you were told that the arrangements are fully compliant.

If you think you may already be using this payment arrangement you should contact HMRC as soon as possible. HMRC offers a range of ways to notify us How to make a disclosure to HMRC. We can help you get back on track.

HMRC clearly sets out on GOV.UK how to pay different taxes and duties, including what to do if you have difficulties paying.

What to do if you can’t pay

If you cannot pay the tax you owe in full or on time, HMRC can work with you to find a way for you to pay what you owe. You should contact HMRC quickly to discuss the tax you owe or if you disagree with the debt amount. HMRC can then work with you to resolve any queries and how to clear any debt.

If you do not engage with HMRC or refuse to pay what you owe, HMRC may visit you at your home or business address to help us understand your circumstances so we can work with you to settle the tax you owe.

We may also use a debt collection agency to discuss settling your debt.

Insolvency and Bankruptcy action, along with other debt recovery actions, may also be considered where debts remain unpaid.

Paying HMRC: detailed information

What will happen if you do not pay your tax bill  

Report a concern

If you’re concerned about an individual or organisation offering you a tax saving arrangement, avoidance scheme or fraud arrangement, you can report it to us using our report tax fraud or avoidance online form.

You can submit this form anonymously and do not have to give your name, address or your email.

You can phone HMRC to report tax fraud or avoidance if you cannot use the online form.

HMRC is committed to tackling fraud and will continue to use its full range of criminal and civil powers to stop fraud and take action against those who break the rules.