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Security for VAT due

HMRC may require a taxable person to give security (or further security) of such amount as they may determine for the payment of any VAT¹ which is, or may become, due². This has been described as a 'draconian provision' which can effectively put a trader out of business³.

HMRC states that 'HMRC may ask for a deposit or bond if they think there's a risk you won't pay your tax or duty on time. They call this a security. If you don't pay your bill HMRC can use the security to settle it. HMRC won't accept property or other high-value items as a deposit.'⁴

With effect from 10 April 2003, HMRC's powers were significantly extended⁵ in order 'to tackle serious cases of VAT evasion where several businesses act together to attack the tax system⁶'. HMRC may require a taxable person, as a condition of his supplying or being supplied with goods or services under a taxable supply, to give security (or