Guidance

Securities for Insurance Premium Tax — SS/FS3

Published 7 January 2013

This factsheet tells you about the securities that a ‘registrable person’ may or must give HMRC for Insurance Premium Tax (IPT). A registrable person is a person or business that is registered or required to be registered for IPT under sections 73(3) and 73(3A) of the Finance Act 1994.

A registrable person is required to give an amount of security if there is a serious risk that they will not pay IPT. This applies to any IPT which is or becomes due. We hold the security until we believe that they are no longer at risk of not paying the amount due. We may use the security to pay any tax owed during that time. They are required to do this under paragraph 24 of Schedule 7 to the Finance Act 1994.

This factsheet is one of a series. For the full list, go to GOV.UK and search ‘SG42500’.

Notice of requirement to give security

If we require a registrable person to give us security, we will send them a notice of requirement if (either of the following):

• in their previous or current business, they have failed to comply with their IPT obligations
• we have reason to believe that they might fail to comply with their IPT obligations

The notice will show:

• the amount of security required
• when the security is required
• the way in which to give the security

Sending a warning letter before the notice of requirement

We will usually send a warning letter to the registrable person telling them that we may require security. However, if we believe that sending a warning letter will increase the risk that IPT will not be paid, we may send a notice of requirement without warning.

What happens if a registrable person does not give security in full

If a registrable person is required to give security and has not done so, it’s a criminal offence if they enter into taxable insurance contracts. If they commit this offence, we may prosecute them. If we successfully prosecute, they may have to pay a fine of up to £20,000 for each taxable supply they make without giving the security.

In certain circumstances, we may prosecute a registrable person individually. This may result in them being personally responsible for paying any fines and compensation awarded by the court.

How to give us security

A registrable person can give us security by (either of the following):

• making a payment
• providing a guarantee in the form of a performance bond

If they want to give us security by a performance bond, they will need to contact the officer that sent them this factsheet.

Before making a payment, they should contact their bank or building society to confirm:

• the services available
• any daily value limits
• how long they will take to transfer the money and the latest cut-off times for making a payment

Details of how to make a payment are shown below.

Paying using your own bank

A registrable person can pay using their own bank or building society by:

• Bacs Direct Credit
• internet
• telephone banking
• Faster Payments
• CHAPS

They will need to give their bank or building society the bank details shown below.

• Sort code — 08-32-00
• Account number — 12000903
• Account name — HMRC Miscellaneous
• Reference — ‘Security’ followed by their IPT registration number

Paying by post

If a registrable person is unable to pay by any of the above methods, they can pay by post. Cheques should be made payable to ‘HM Revenue and Customs only’ followed by ‘Security’ and their IPT registration number.

Cheques should be sent to:

HM Revenue and Customs 
Cumbernauld Accounting Team
Floor 6
GLASGOW
BX9 1XR

How we work out the amount of security

We work out the amount of security using a formula that has been approved by independent tribunals. That formula is based on (both of the following):

• the amount of IPT paid or due to be paid by the registrable person for a 4 or 6 month period
• an amount equal to any arrears of IPT from the current business

We will require an amount of security based on the IPT we estimate the registrable person would have to pay over:

• 6 months if they make quarterly returns
• 4 months if they make monthly returns

We work out the amount of security using the most accurate information available to us at the time. Although we use the amount of any arrears of IPT as a way of calculating the amount of security, this does not affect the arrears. We will continue to pursue payment of any arrears in the normal way.

The notice of direction

We can direct a registrable person to change how often they submit their IPT returns. This allows us to monitor the business activities more closely. We may issue a notice of direction to a registrable person that makes quarterly returns, telling them they must change to monthly returns. Once we are satisfied there is no longer a risk of IPT due not being paid, we may tell the registrable person to submit quarterly returns.

A registrable person can also ask to move to monthly returns.

Forms of security that we will accept

We will only accept 3 forms of security. These are:

• an electronic payment to a HMRC bank account
• a cheque or banker’s draft
• a guarantee in the form of a performance bond authorised and approved by a financial institution

We cannot accept property or items. For example, high value motor vehicles or boats as security.

For more information about the acceptable forms of security, please contact the officer that has sent you this factsheet.

Time limits for giving security

Once we send a notice of requirement to a registrable person, they must give security immediately. We will allow what we consider to be a reasonable amount of time for the security to be arranged.

How long we will hold the security for

We normally hold security for IPT for at least:

• 12 months for a business on monthly returns
• 24 months for a business on quarterly returns

During this time, we will monitor the tax affairs of the business. We will return the security when we consider there’s no longer a risk the business will fail to pay the IPT that is due or may become due.

Using the security to pay what is owed

If a registrable person gives security and then fails to pay IPT that is due, we may use some or all of the security to pay what is owed. We may then require the registrable person to give further security.

When we no longer require the security for IPT, we will check if the registrable person has any other debts with HMRC. If they do, we may then use the security to pay those debts.

Where there are no outstanding debts, we will return the security to the registrable person.

Making a Time to Pay arrangement for arrears of IPT

If a registrable person has arrears of IPT they can agree to a ‘Time to Pay’ arrangement. This allows them to pay their arrears over an agreed period of time.

For more information about agreeing to a Time to Pay arrangement, contact the officer that sent you this factsheet.

If we agree a Time to Pay arrangement, we may consider withdrawing the notice of requirement to give security.

If the registrable person disagrees

If there’s something that the registrable person does not agree with, they can tell us.

If we make a decision that they can appeal against, we’ll write to them about the decision and tell them what to do if they disagree. They will usually have 3 options. Within 30 days, they can:

• send new information to the officer dealing with the check and ask them to take it into account
• have their case reviewed by an HMRC officer who has not been involved in the matter
• arrange for an independent tribunal to hear the appeal and decide the matter

For more information about appeal rights, go to GOV.UK and search ‘HMRC1’ or ‘disagree with a tax decision’.

Appealing to an independent tribunal and continuing to make taxable supplies

If a registrable person has appealed to an independent tribunal against a notice of requirement, they must give us the security we have asked for. If they continue to trade without giving us the security, they may still be prosecuted.

However, to allow time for the appeal to be heard, we may agree to wait for the tribunal’s decision before starting or continuing any prosecution action. If we agree to wait, we will write to tell them. If the tribunal dismisses the appeal, or the registrable person withdraws it, we may decide to start or restart prosecution action.

Principal rights and obligations

A registrable person has:

• the right to check with their adviser — we’ll allow a reasonable amount of time for them to do so
• an obligation to take care to get things right — if they have an adviser, they must still take reasonable care to make sure that any returns, documents or details they send us on their behalf are correct

The ‘HMRC Charter’ explains what a registrable person can expect from us and what we expect from them.

For more information, go to GOV.UK and search ‘HMRC Charter’.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer who has contacted you. We’ll help you in whatever way we can. For more information, go to GOV.UK and search ‘get help from HMRC if you need extra support’.

You can also ask someone else to deal with us on your behalf. For example, a professional adviser, friend, or relative. However, we may still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy of our letter to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.