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HMRC internal manual

Securities Guidance

HM Revenue & Customs
, see all updates

The security: using security: using a security deposit: insolvent businesses

Where a security deposit is held and the person who provided security becomes insolvent set the insolvency review code.

Also set the code where you are about to repay a security deposit but the person becomes insolvent.

Advise the National Insolvency Unit (NIU) that there is a security deposit held, and give them the following details

  • the amount of the security deposit held
  • in VAT/environmental tax cases the Miscellaneous Cash Deposit (MCD) number and date of allocation
  • in PAYE/NICs cases the SAFE charge reference.

If there is a debt at the date of insolvency the NIU will instruct DMB Banking to use the security deposit and then repay any remaining funds to the Insolvency Practitioner (IP).

Where the debt is greater than the amount of security held the NIU will submit proof of debt to the IP.

It is not possible to offset any part of the security deposit against post-insolvency debts. The NIU will pursue these debts through the IP.

Where an employer becomes insolvent we can only use security that an officer of the company provided against the employer’s PAYE/NICs debts. Any surplus is returned to the officer of the company.