VAT Security

VAT Security

HMRC can issue a Notice of Requirement to Give Security, designating a company as a VAT risk. This is a serious matter that requires immediate attention.

How It Works

When HMRC issues a Notice of Requirement, the company must provide a deposit as security against future VAT liabilities. If the company remains compliant, the deposit is returned after one year.

Common Scenario

The most common scenario involves directors who have previously been involved with a company that was liquidated owing VAT to HMRC. When those directors launch successor enterprises, HMRC may designate the new company as a VAT risk based on the directors’ history.

The Critical 30-Day Window

Companies must appeal within 30 days of receiving the notice, or they risk prosecution. This is an area where companies often delay seeking professional counsel, which can have devastating consequences.

HMRC’s Typical Sequence

HMRC follows a well-established sequence once a Notice of Requirement has been issued:

1. Issue the notice to the company.
2. Verify whether the company is still trading.
3. Request meetings under caution with the directors.
4. Conduct recorded interviews.
5. Prosecute through the Magistrates Court if the company has failed to comply.

The consequences of prosecution include a potential criminal record plus financial penalties.

Our Challenge Strategy

The best approach when facing a VAT Security notice involves:

• Immediate guidance — seeking professional advice as soon as the notice is received.
• Negotiate staged payments — working with HMRC to agree a manageable payment schedule for the security deposit.
• File tribunal appeals — challenging the notice through the proper legal channels.
• Be prepared for an 18-month process from start to resolution.

If your company has received a Notice of Requirement to Give Security, contact us immediately. The 30-day appeal window is critical and must not be missed.