HMRC Security Bond

Where a business has suffered financial difficulties or an insolvent company has been bought out of administration by existing directors or people with links to the previous management, HMRC may issue a Notice of Requirement to pay a security bond (NOR). The amount of the bond is typically between 4 to 6 months VAT or PAYE for the business and it is a criminal offence to continue to make taxable supplies (trade) without first paying the bond.

Directors can find themselves in a difficult position as they may well not have the funds to pay the NOR but are confident that they would be able to pay the tax as it fell due. Sometimes it is possible to negotiate a workable solution with HMRC. However, if the Company continues to trade without paying the security bond an offence is committed and may well be investigated and prosecuted. The offence is dealt with in the Magistrates Court and is punishable by an unlimited fine. Both the Company and its Directors can be prosecuted for this strict liability offence.

We are experienced in advising Directors in interviews under caution and in prosecutions in the Magistrates Court. Our regulatory solicitors have ensured that in the event of a guilty plea all available mitigation is presented and they have achieved favourable results.