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HMRC internal manual

Securities Guidance

Requirement to give security: VAT and environmental taxes: the person’s options

It is essential that as soon as the person is served with, or receives in the post, a Notice of Requirement (NOR) they understand their options and the consequences of the NOR.

The person can

  • Give the security
  • Opt to pay the lower amount of security you require by going onto monthly returns
  • Cease to make taxable supplies
  • Request time to pay the tax, see SG25560 
  • Dispute the NOR, see SG70000, by

    • providing the decision maker (HO) with further information
    • requesting an independent review
    • appealing to the tribunal.

Explain to the person that they have 30 days, from the date of the NOR, to exercise their options. If the person disputes the NOR we do not require them to provide security while the dispute is being resolved.

The person can give security by

  • paying a security deposit, see SG52100 
  • providing a performance bond, see SG53000 
  • setting up a joint account with HMRC, see SG54000.

If the person has an agent, advise the customer to talk to them about the NOR. Once service of the NOR is confirmed, offer to send a copy to the person’s authorised agent.

Ensure the person is aware of the consequences of not providing security, which are that the business, officers of the business, managers and all those who we consider to be actively involved in running the business can be prosecuted if they continue to make taxable supplies. They may incur fines of up to £5,000 for each offence committed.

Note: Although 30 days is given to appeal against the NOR we may in certain circumstances seek to prosecute offences committed in this 30 day period, for example in

  • cases involving Missing Trader Intra-Community VAT Fraud goods or services or
  • cases of persistent non-compliance where a person has been in the security regime previously.