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HMRC internal manual

Securities Guidance

From
HM Revenue & Customs
Updated
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Security for tax at risk of being unpaid: the consequences of not providing security

For indirect taxes, businesses and/or company officers that do not give the required security can be prosecuted. The criminal sanction for VAT is up to £5,000 for each taxable supply made since the Notice of Requirement (NOR) was served. For environmental taxes and insurance premium tax the criminal sanction is up to £5,000 for each offence committed since the NOR was served.

Although we don’t impose any conditions on employers they can be prosecuted if they do not give security for PAYE/NICs when required. The criminal sanction is up to £5,000 for the offence of failing to give security.

The law on securities is at SG15000.

VAT

We require security of the taxable person as a condition of their supplying goods or services under a taxable supply, as defined in section 4(2) of the Value Added Tax Act 1994.

It is a criminal offence for the taxable person to make taxable supplies without giving the required security.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each taxable supply they make without giving security from the date the NOR was served.

Landfill Tax

We require security of the registrable person as a condition of their carrying out taxable activities.

A person carries out “taxable activities” if they

  • make a taxable disposal in respect of which they are liable to pay tax
  • permits another person to make a taxable disposal in respect of which they (the first-mentioned person) are liable to pay tax.

Where a taxable disposal is made without the knowledge of the person who is liable to pay the tax in respect of it, they shall be taken to have permitted the disposal (section 69(2) of the Finance Act 1996).

It is a criminal offence for the registrable person to carry out taxable activities without giving the required security.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each taxable activity they enter into without giving security from the date the NOR was served.

Aggregates Levy

We require security from the registrable person for the payment of any aggregates levy which is or may become due from them.

A person is guilty of a criminal offence if they are responsible for any aggregate being subjected to commercial exploitation in the United Kingdom where, at the time it is so subjected, they have been required to give security and failed to comply with that requirement.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each taxable activity they enter into without giving security from the date the NOR was served.

Climate Change Levy

We require security from a registrable person for the payment of any levy which is or may become due from them.

A person is guilty of a criminal offence if they

  • are liable to account for the levy on a taxable supply that they make where, at the time the supply is made, they have been required to give security and have failed to comply with that requirement, or
  • are liable to account for the levy on a taxable supply that another person makes to them if they make arrangements for the making of the supply at a time when they have been required to give security and have failed to comply with that requirement.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each taxable supply they make without giving security from the date the NOR was served.

Insurance Premium Tax

We require security of a registrable person as a condition of their entering into taxable insurance contracts, as defined in section 73(1) of the Finance Act 1994.

It is a criminal offence for the registrable person to enter into taxable insurance contracts without giving the required security.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each taxable insurance contract entered into without giving security from the date the NOR was served.

PAYE/NICs

A person required to provide security does not have to meet conditions.

It is a criminal offence not to provide security when required.

A person guilty of a criminal offence may be liable to a fine of up to £5,000 for each offence of failing to give security. S684 (4A) of the Income Tax (Earnings and Pensions) Act 2003 says

“A person who fails to comply with a requirement imposed under PAYE regulations to give security, or further security, for the payment of any amount commits an offence if the failure continues for such period as is specified; and a person guilty of an offence under this subsection is liable on summary conviction to a fine not exceeding level 5 on the standard scale.”

This section also applies to a requirement of security imposed under the NICs regulations.