Security for tax at risk of being unpaid: risk assessing cases: is security action necessary?
You may have potential securities cases referred to you from a number of sources, for example from Local Compliance intervention teams and Debt Management, or you may self-source cases using HMRC’s electronic systems.
Deciding whether a security intervention is necessary means
- identifying an event such as non-payment or the failure to submit a return
- determining if the event might result in a loss of revenue, for example because assets disappear before they can be used to satisfy the tax debt
- considering any other circumstances that may mitigate the risk, for example the existence of substantial assets that might ultimately be converted to cash
- assessing whether or not there is likely to be a loss of revenue if no security action is taken.
The following cases are potentially high-risk
- multiple business failures (also known as phoenix traders), where the person concerned in the running of the business is connected with past failures to pay tax due, see SG24200
- businesses that fail to pay tax on time where the factors set out in SG24300 apply
- businesses run by “shadow” directors - undischarged bankrupts or persons otherwise disqualified from acting as directors, see SG24250
- businesses run by persons convicted of tax fraud.
At all times you should consider the implications of cross-tax working when reviewing potential security cases.
If you decide that the case is not suitable for a security intervention, but there are other risks on the case, forward it to the team that can best address those risks.