Kangs Solicitors have been advising a London based LLP in respect of an investigation by HM Revenue and Customs (HMRC) relating to alleged offences contrary to Section 684 (4a) of the Income Tax (Earnings and Pensions) Act 2003.
Timothy Thompson of Kangs Solicitors explains how we negotiated the events leading to a satisfactory conclusion of this investigation.
The Circumstances | Kangs Tax Investigation Advisory Team
Our client company was issued with a formal notice requiring the payment of security which they disputed based upon errors by a number of payroll companies that had been employed.
Efforts made by the company’s accountants to settle this matter failed with the result that HMRC continued to pursue the claim threatening criminal prosecution in the event of failure to comply.
How We Assisted | Kangs Criminal Defence Team
Having taken detailed instructions from our client and discussed the matter at length, all of the available documentary evidence was carefully examined with the result that a document was identified which was of paramount importance.
Armed with this evidence, we were able to negotiate with HMRC.
Successful Conclusion | Kangs Tax Investigation Negotiating Team
As the result of our endeavours, HMRC:
- closed their investigation in respect of the possible criminal prosecution,
- withdrew the Notice against our client and
- referred the matter back for further consideration, with the result that
- HMRC subsequently confirmed that upon payment of outstanding PAYE and NIC no further Notice requiring the payment of security would be submitted.
What Does The Law Say? | Kangs Tax Advisory Solicitors
Section 684 (4a) of the Income Tax (Earnings and Pensions) Act 2003 references the PAYE regulations; the Income Tax (Pay As You Earn) Regulations 2003.
Part 4A deals with Security for payment of PAYE and the requirement to give security to HMRC.
Regulation 97N states as follows:
‘In circumstances where an officer of Revenue and Customs considers it necessary for the protection of the revenue, the officer may require a person described in regulation 97P(1) (persons from whom security can be required) to give security or further security for the payment of amounts in respect of which an employer described in regulation 97O (employers) is or may be accountable to HMRC under regulation 67G, 68 or 80 (payments to HMRC and determination of unpaid amounts).’
What Is Security? | Why Is It Required? | How Much Has To Be Paid?
Security can take the following forms:
- Depositing monies with HMRC
- Obtaining a Performance bond with an approved financial institution
- Opening a joint bank account with HMRC, in which funds are held
Security is usually required by HMRC if there has been a previous failure to pay not just PAYE but NIC.
HMRC calculate the level security by looking at the level of contributions due over a certain period and add to that the amount of arrears at the date of the notice.
How Is Security Requested? | Kangs Solicitors
HMRC normally send a warning letter confirming that security MAY be due.
Once HMRC has properly assessed whether security is required, and the amount involved, it will issue a formal Notice letter in accordance with Regulation 97Q of the Income Tax (Pay As You Earn) Regulations 2003, which states:
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—
(a) the value of security to be given,
(b) the manner in which security is to be given,
(c) the date on or before which security is to be given, and
(d) the period of time for which security is required.
What Are The Options? | Kangs Tax Investigation Lawyers
- If agreed:
Payment is required to be made by the date specified in the notice which will not be less than 30 days later.
- If not agreed:
There is an appeal period of thirty days.
Consequences of Failure To Respond Or Pay?
How Can We Help? | Kangs Financial Investigation Solicitors
We are specialist tax investigation solicitors and fraud lawyers who are experienced in advising and defending all forms of civil and criminal HMRC investigations and inquiries.
Who Can I Contact? | Kangs Tax Lawyers
If you wish to discuss any issue you have with HMRC, please feel free to call any of our tax lawyers below: