A firm that failed to pay a security bond of £30,000 and continued to make supplies illegally has been fined over £24,000.
HM Revenue & Customs (HMRC) took AJR Construction and Civils Ltd to court, along with the sole owner and director, Anthony Reape. The company and the director were faced with 10 charges each for the illegal supply of services and goods.
In December 2012, HMRC issued a notice of requirement for payment of security in the sum of £30,000, but officers had concerns after realising that a previous company belonging to Reape had outstanding tax debts. When HMRC believes that there is a risk that a firm won’t pay its taxes, the organisation can request a security payment. Although the security hadn’t been paid, despite being issued in 2012, Reape and the company continued to trade.
Reape started a new venture – an extension of the previous firm that had a history of poor compliance and tax debts. The security bond of £30,650 was requested to ensure that payments would be made. Reape stated that although he had intended to pay the security, the new company had experienced cash flow difficulties, which had made it impossible for him to pay. The firm has a turnover of £750,000 and now has further VAT debts that must be paid.
The company and Reape were ordered to pay £12,417. 65 each (totalling £24,835.30 ), which consisted of costs, fines and compensation.
What is a security?
If HMRC believes that there is a significant risk that a company won’t pay its tax or duty in a timely manner, it can request payment of a security. This is requested using a document, called a Notice of Requirement, that provides the amount to be paid, when it must be paid by and how to pay. Although a security can be requested for various types of tax, the most common are VAT and PAYE.
What if you don’t agree?
You can ask for a review of the security by an independent officer at HMRC, or you can appeal against the decision at tribunal. If you don’t pay the security, HMRC also has the right to take the trader to court.
What if you don’t pay the security?
Failure to pay the security may result in a fine of up to £5,000. Unless the security is paid in full, you are not permitted to continue to provide taxable supplies, and continuing to do so could attract a fine from HMRC.
If you want more information about security payments, contact us here at The Accountancy Partnership.
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