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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: securities for PAYE and VAT

Contents

Background 
DM referrals to Fraud and Investigation Service (FIS) securities 
Referral considerations for DM 
Referral by DMTC 
All other DM referrals 
Case review by DM PAYE/VAT securities vetting team (SPoC) 
Cases accepted or deselected by RIS 
Action by FIS 
Where a deposit has been received 
Following the issue of a Notice of Requirement, time to pay requests received by FIS

Background

HMRC can demand a security deposit where we identify tax is at risk. HMRC will seek security for VAT, indirect taxes, PAYE and NICs deductions only where there is serious risk to the revenue and under the powers set out in legislation (see the legal framework below).

Fraud Investigations Service (FIS) must demonstrate that their decision to take security action is reasonable and proportionate to the risk involved. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The work to enforce and administer securities for both direct and indirect taxes is done by the ‘Securities’ teams in Fraud Investigations Service (FIS).

Any person required to give security must be served with a Notice of Requirement (NoR) to give security. A person is entitled to a review by HMRC of its appealable tax decisions and can appeal against:

  • for VAT and environmental taxes, the requirement of any security
  • for NICs and PAYE, any requirement in the NOR.

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Businesses who are having genuine financial problems with paying arrears of VAT or PAYE should be dealt with along normal lines for debt recovery purposes.

HMRC can ask for a security for most indirect taxes including VAT, Excise and the environmental taxes. The power to require a security was extended to PAYE and Class 1 and Class 1A NICs from 6 April 2012. Different legislation applies for different taxes.

  • 1.1 VAT - Paragraph 4(2)(a), Schedule 11, VAT Act 1994

1.1.1 This allows us to require a taxable person to give an amount of security if there is a serious risk that the trader will not pay VAT which is or becomes due.

  • 1.2 Insurance Premium Tax - Paragraph 24, Schedule 7, Finance Act 1994

1.2.1 This allows us to require a registrable person to give an amount of security if there is a serious risk that they will not pay Insurance Premium Tax (IPT) which is or becomes due.

  • 1.3 Landfill Tax - Paragraph 31 of Schedule 5 to the Finance Act 1996

1.3.1 This allows us to require a registrable person to give an amount of security if there is a serious risk that they will not pay Landfill Tax (LFT) which is or becomes due.

  • 1.4 Aggregates Levy - Section 26(1) of the Finance Act 2001

1.4.1 This allows us to require a registrable person to give an amount of security if there is a serious risk that they will not pay Aggregates Levy which is or becomes due.

  • 1.5 Climate Change Levy - Paragraph 139(1) of Schedule 6 to the Finance Act 2000

1.5.1 This allows us to require a registrable person to give an amount of security if there is a serious risk that they will not pay Climate Change Levy (CCL) which is or becomes due.

  • 1.6. Pay As You Earn or National Insurance Contributions - Part 4A of the Income Tax (Pay As You Earn) Regulations 2003 and Part 3B of Schedule 4 to the Social Security (Contributions) Regulations 2001

1.6.1 This allows us to require an employer to give an amount of security if there is a serious risk that they will not pay Pay As You Earn (PAYE) or National Insurance contributions (NICs) which become due.

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DM referrals to Fraud and Investigation Service (FIS) securities

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All DM referrals for consideration should go through the DM VAT/PAYE securities vetting team (DM securities SPoC) who will establish if the case is suitable for onward referral.

You should focus consideration on VAT and PAYE debts of £20,000 or more when thinking about whether a referral may be appropriate.

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Referral by DMTC

DMTC collectors face time constraints in call handling and do not have access to all systems so will follow a ‘diluted referral’ process. Whilst they still look for the same basic indicative features shown below for selection they will make a quick informed decision on whether the case, irrespective of the legal entity, has the potential for a security.

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DMTC operators do not have to complete a SEES referral form. They should refer by email, as advised in their guidance, to the DM securities SPoC mailbox (This content has been withheld because of exemptions in the Freedom of Information Act 2000) including the:

  • VAT registration number and/or PAYE reference
  • name of the taxpayer/business
  • current debt

and note IDMS with their PID saying they have made a security referral.

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All other DM referrals

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Debt recovery activity can still continue even when a referral has been made, is being considered or even when FIS have a case and if there is a security in place. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Where a deposit has been received

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You must also contact the DM securities SPoC if you have an outstanding debt and the employer/person advises this and requests the security is used against their debt. The DM SPoC will liaise with the appropriate FIS officer to establish whether they have already started offset.

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