PAYE Notice of Requirement | Successful Resolution of Prosecution for Non-Compliance
KANGS recently assisted in the successful conclusion of prosecution proceedings against a company and its two directors. The proceedings were initiated following their failure to comply with a Notice of Requirement served by HMRC under the Income Tax (Pay as You Earn) Regulations 2003 and the Social Security (Contributions) Regulations 2001.
In instances where HMRC assesses that there is a potential risk of non-payment of PAYE, National Insurance (NI) or other employer-related obligations, a Notice of Requirement to provide security, typically a sum of money, may be issued.
Sukhdip Randhawa explains how the team at KANGS achieved a successful outcome for our client.
The Circumstances
Between January and February 2024, HMRC identified and monitored significant non-compliance by our client company in relation to its PAYE and NI obligations. Despite multiple attempts to contact the company and its directors, HMRC was unsuccessful resulting in our client company being issued with a Notice of Requirement.
Our client sought further time to settle the payment, but HMRC declined the proposal citing that the offer was too low and considered there to be a lack of co-operation and communication. Consequently, court proceedings were commenced.
Following the receipt of the summonses, our clients entered guilty pleas without seeking legal advice. The proceedings were adjourned whilst the Judge considered financial statements which had been provided by the company and its directors.
How We Assisted Our Clients
Given that our clients had pleaded guilty to all offences prior to seeking legal advice, the responsibility of the team at KANGS was to pursue the most favourable settlement possible on their behalf.
Accordingly, our team:
- examined all the evidence which had been served by the Prosecution,
- attended upon our clients taking detailed instructions upon all the events leading to the court proceedings,
- examined all the financial documents and accounts relating to the business, highlighting the cashflow difficulties the company had encountered,
- advised our clients on their respective positions and the appropriate steps to take in order to mitigate their liabilities as much as possible,
- collated all pertinent information which was incorporated into a Mitigation Bundle for consideration by the Judge.
The Successful Outcome
Our clients expected that the Judge would impose substantial financial penalties, as he had reserved the Sentencing Hearing for himself at the original adjourned Hearing. The offences to which they had pleaded guilty were potentially punishable with unlimited fines.
However, having considered the detailed mitigation prepared and presented by the team at KANGS on behalf of our clients, the Judge imposed the following:
- a fine of £1,000 on both of the directors,
- a fine of £3,000 upon the company,
- prosecution costs and
- a victim surcharge.
Additionally, our clients were all granted twelve months in which to make full payment. Our clients are absolutely delighted with this highly satisfactory outcome achieved on their behalf.
The Relevant Law
The Income Tax (Pay as You Earn) Regulations 2003
S.97 N. provides that in circumstances where an officer of Revenue and Customs considers it necessary for the protection of the revenue, the officer may require one of the following persons to give security, or further security, for the payment of amounts which are, or may be accountable to HMRC:
- the employer,
- a director,
- a company secretary,
- any other similar officer, or
- any person purporting to act in such a capacity,
- in a case where the employer is a limited liability partnership, a member thereof.
The Social Security (Contributions) Regulations 2001
S. 29N. provides that in circumstances where an officer of Revenue and Customs considers it necessary, the officer may require a person, from a list the same as that shown above, to give security or further security for the payment of amounts which an employer is or may be liable to pay to HMRC.
Notice of requirement
An officer of Revenue and Customs must give Notice of a requirement for security to each person from whom security is required and the Notice must specify the:
- value of security to be given,
- manner in which security is to be given,
- date on or before which security is to be given and
- period of time for which security is required.
How Can We Assist?
Our solicitors possess extensive experience gained over years of advising and representing clients facing prosecution for breaches of regulations of every conceivable nature.
If your company is facing allegations of breaching Tax Regulations, it is essential to seek expert legal advice immediately. Our team includes specialists in tax law who can provide comprehensive representation and advice, supporting you through investigations and potential prosecutions.
If we can be of assistance, please do not hesitate to contact a member of our team at KANGS using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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