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HMRC internal manual

Securities Guidance

Security for tax at risk of being unpaid: warning letter

You should normally issue a warning letter in a non-compliance case. Exceptionally, you may decide to proceed directly to serving the Notice of Requirement (NOR), for example in a case where there is significant debt and a history of failed time to pay arrangements.

You should normally proceed directly to serving the NOR in multiple business failure cases. Exceptionally, you may decide to issue a warning letter, for example in a case where there has been only one previous failure and there are potential mitigating circumstances for that failure.

The PAYE/NICs warning letters are SEC1 and SEC4 in SEES Forms and Letters.

There is no legal requirement to issue a warning letter before requiring security, but it gives the person an opportunity to provide reasons why we should not require security, and may provide us with better information on which to base the amount of security.

The letter may be sent by post for the attention of the registered person or employer. Alternatively, if resources permit, it may be hand delivered. One of the factsheets listed in SG42500 must be issued with the warning letter.

You will need to quantify the amount of security required as at the date you send or give the warning letter, see SG32000. The calculation method is explained in the warning letter, but not the precise figures which may change from day to day.

The issue of a warning letter demonstrates to the tribunal, in the event of an appeal, the steps we took to avoid the need to require security and to involve the person in the process of determining the amount of security required.

Delivery of the warning letter by hand allows us to

  • speak to the person about the VAT account and/or PAYE/NICs debt
  • get answers to any questions we have
  • discuss the potential security in more detail.

After you issue the warning letter the person may

  • bring returns and payments up to date
  • contact you to discuss time to pay arrears of tax, see SG25560 
  • ask to be put on monthly returns (there is no facility to do this in PAYE/NICs cases)
  • give you information that suggests security action is not required.

In these circumstances either

  • close the case


  • monitor the case for submission of returns and payment of tax, see SG25500.

If there is no response to the warning letter you should consider issuing to the person

  • a Notice of Direction to make monthly returns (NOD), except in PAYE/NICs cases, see SG25540