If HMRC requests a security bond, your response will depend on whether you wish to appeal the decision or not.
If you don’t wish to appeal the decision, you must fulfil the terms set out in the Notice of Requirement. The terms of any particular Notice of Requirement varies, but in general terms, they stipulate the amount of the security required, what tax it relates to, when it is required by and how to pay the security. It’s very important that you fulfil all of these conditions as there are severe sanctions for not paying security demanded – these include criminal prosecution and fines of up to £5,000.
You are likely to need specialist help immediately and you should contact us at the earliest opportunity. HMRC do make mistakes and there are things that can be done.
Request a Review of the Decision
If you want to appeal the decision, the first stage is to notify HMRC that you want a review of the decision within 30 days of receiving the Notice of Requirement. The Notice of Requirement will contain details about how to do this.
A review is an internal HMRC process. Reviews are carried out by review officers who have experience in security bonds but are independent of the decision maker who made the initial decision to issue the Notice of Requirement with the demand for security.
The review officer will take a fresh look at the decision to require security in an objective and independent fashion. They will look at the existing (and any new evidence if applicable) available to them. Once they have looked at the evidence, they will either uphold, vary or cancel the original decision.
HMRC must inform you of the review decision within 45 days of your request for a review.
Appeal to Tribunal
If you have requested a review and are not satisfied with the review decision, you can appeal against the Notice of Requirement to the First-Tier Tribunal.
You cannot appeal to the tribunal while a review is underway, so you need to wait for the review to be concluded before lodging your appeal to the tribunals service. You must lodge your appeal to the Tribunals Service within 30 days of receiving the review decision.
To notify an appeal against the Notice of Requirement and the review decision, you will need to complete the Tribunals Service appeal form and send it to the Tribunals Service. A copy of the form can be found here, or you can call 0300 123 1024 to request that a form is sent to you.
You are not required to lodge the security with the court or with HMRC before the tribunal has heard your appeal.
For VAT or environmental taxes, the tribunal will consider whether the decision maker’s decision to issue a Notice of Requirement was reasonable, whether they took the decision based on the relevant facts and correct law and whether the requirement and amount of security demanded was reasonable. The tribunal can only take into account the facts that the decision maker had at the time the decision was made.
Where the tribunal is for VAT or environmental taxes, the tribunal cannot adjust the amount of the security – they can only allow or dismiss the appeal.
In PAYE/ NICs cases, the tribunal will consider the same issues when reviewing the case. However, in these situations, they can adjust the amount of security required under the Notice of Requirement in addition to being able to confirm or set the Notice of Requirement aside.
If the tribunal upholds the Notice of Requirement or vary its terms, you will need to fulfil the terms of their decision.
Have You Received a Security Bond Request?
If HMRC are threatening to or have issued you or your company with a Notice of Requirement for security, we may be able to help. Call us on 0800 074 6757 for a free, no obligation discussion, or use the live chat function on your screen.
Author: Mike Smith