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HMRC internal manual

Holding and Movements Assurance Guidance

Registration and approval: after the pre-approval visit: poor compliance in this or other HMRC regimes

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

A trader’s refusal to render returns after warning letters and other sanctions have been raised indicates a high risk and would suggest, where we have discretion in law to do so, that the application/approval should be refused/revoked. Each case needs to be considered on its own merit; for example, if the trader only exports goods and fails to submit a VAT return, then a refusal to approve/authorise (or revocation) for failure to seek refunds may not be appropriate.

Where the trader has debts owing to the Crown, we should not refuse (or revoke) an approval/authorisation until it is clear that the trader is not going to pay, or that the debt poses a significant risk to the trader’s ability to either start or continue a business in excise goods. In some cases, arrangements may be in place to pay the debt back. For example, the trader may have a sizeable, unforeseen debt (perhaps because of a genuine mistake e.g. they zero-rated VAT on a product or service which should be standard rated) and has entered into a time to pay arrangement to clear the debt.

In other cases, the debt may be contested by the trader and be the subject of a review/Tribunal. Before a Tribunal will hear a case, the trader will be required to either pay the debt, have adequate security in place to cover the debt, or be granted a certificate of hardship in place of the debt. During the review period, we do not normally enforce the debt. It may be difficult to defend a decision to refuse (or revoke) because of an irregularity/debt under review until the case has been heard. Ideally, the assurance officer should have a number of other factors to support their decision.

Officers also need to consider the size of the debt before deciding if refusal (or revocation) is proportionate for the amount due. Where the amount is substantial, the risk to the revenue should be taken into account when making the decision. On the other hand, refusal (or revocation) because of a small debt alone may not be appropriate.

The size of debt and general standing of the business should be considered; for example, £50,000 due from a small business may be a higher risk than the same amount due from a multi-national company.

Before any action is taken, it is important that the officer discusses the debt with the debt management team responsible for the trader. Where we approve/authorise a trader with a debt on file, it is important that we carefully monitor the business.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)