Precision Fabrications Andover Ltd & Ors v The Commissioners for HMRC

Neutral Citation: [2026] UKFTT 01255 (TC) FIRST-TIER TRIBUNAL

TAX CHAMBER Case Number: TC 10004 [Location/By remote video hearing] Appeal reference: TC/2025/03977 Notice of requirement of security - PAYE and National Insurance – Tribunal’s jurisdiction Heard on: 11 August 2026 Judgment date: 28 August 2026 Before

TRIBUNAL JUDGE STAPENHURST

MS ANN CHRISTIAN Between

PRECISION FABRICATIONS ANDOVER LTD

MR JONATHAN LEES

MS CAROLINE LEES and Appellants THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS Respondents Representation: For the Appellant: Mr Lees, representing Precision Fabrications Andover Ltd, Ms Caroline Lees and himself For the Respondents: Ms Verhoeven, litigator of HM Revenue and Customs’ Solicitor’s Office

DECISION

INTRODUCTION 1. This is an appeal by Precision Fabrications Andover Ltd (the "Company") and its directors, Mr Jonathan Colin Michael Lees and Ms Caroline Zara Lees (together, the "Appellants") against Notices of Requirement to give security (the "NORs") issued by The Commissioners for His Majesty's Revenue and Customs ("HMRC") on 13 June 2025 pursuant to Part 4A of the Income Tax (Pay As You Earn) Regulations 2003 ("the PAYE Regulations") and Part 3B of Schedule 4 to the Social Security (Contributions) Regulations 2001 ("the NICs Regulations").

2. The NORs required the Appellants, jointly and severally, to provide security in the sum of £150,109.12, comprising PAYE security of £68,351.04 and NICs security of £81,758.08, by 23 July 2025. The security was to be held for a period of 24 months.

3. On 25 June 2025, the Appellants appealed the NORs. HMRC subsequently upheld the NORs following a statutory review, the outcome of which was notified on 19 September 2025. The Appellants then notified their appeal to the Tribunal on 15 October 2025.

4. HMRC's case is that the NORs were necessary for the protection of the revenue because of the Company's repeated failures over an extended period to pay PAYE and NIC liabilities in full and on time, notwithstanding previous warning letters, Time to Pay arrangements and the withdrawal of an earlier Notice of Requirement in February 2025.

5. The Appellants contend that the Company's payment difficulties arose from exceptional cashflow pressures caused principally by the insolvency of a significant customer, difficulties in obtaining timely payment from replacement customers and consequential difficulties with its financing arrangements. They submit that HMRC ought to have afforded the Company further time to discharge the outstanding liabilities rather than requiring security.

LEGISLATION 6. There is no material difference between the provisions giving HMRC power to require security in the case of PAYE on the one hand and NICs, in the form of Class 1 contributions, on the other. The provisions in the PAYE Regulations and the NICs Regulations effectively mirror one another, with only necessary changes to reflect the different regimes covered by the provisions. We therefore refer primarily to the PAYE Regulations. For ease of reference, however, both sets of provisions are set out in the Appendix to this decision.

7. Regulation 97N of the PAYE Regulations provides that, where an officer of HMRC considers it necessary for the protection of the revenue, the officer may require certain persons to give security or further security for the payment of amounts of PAYE tax for which an employer is or may become accountable under the PAYE Regulations. The persons from whom security may be required are the employer (with certain exceptions not relevant in this case) (see Reg 97O ) and, in the case of a company such as Precision Fabrications Andover Limited, a director, a company secretary, any similar officer and any person purporting to act in such a capacity ( Reg 97P ).

8. Regulation 97Q of the PAYE Regulations sets out certain matters which must be specified in the Notice. If a Notice does not comply, a person is not to be treated as having been required to provide security ( Reg 97Q(5) ). The same applies to the specification of a date in the Notice: that cannot be earlier than the 30th day after the day on which the Notice is given ( Reg 97R(1) ).

9. The time for giving security is postponed if, before the date specified in the Notice for the security to be given, the employer makes a request for a Time to Pay agreement under paragraph 10(1) of Schedule 56 to the Finance Act 2009 . If HMRC refuse the request, however, the security falls to be given on or before the 30th day after notification of that refusal.

10. If an appeal is made under Reg 97V , the security is then due to be given on the 30th day after the day on which the Tribunal makes a final determination of the appeal, subject to any alternative determination by a tribunal or court ( Reg 97V(7)(a) ).

11. Regulation 97V(1) makes provision for appeals against the Notice or against any requirement in it. So far as material to this appeal, Reg 97V(5) provides: “On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may – (a) confirm the requirements in the notice, (b) vary the requirements in the notice, or (c) set aside the notice.” 12. The giving of a Notice is a serious matter, as it has serious consequences for a person subject to it if there is a failure to comply. The failure to provide security by the due date is an offence of strict liability under s 684(4A) of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”), which provides “(4A) A person who fails to comply with a requirement imposed under PAYE regulations to give security, or further security, for the payment of any amount commits an offence if the failure continues for such period as is specified; and a person guilty of an offence under this subsection is liable on summary conviction to a fine not exceeding level 5 on the standard scale.” THE TRIBUNAL’S JURISDICTION 13. We set out below the principal authorities relevant to the Tribunal's jurisdiction in relation to notices of security.

14. It has been established that in relation to security for VAT, the jurisdiction of this Tribunal is supervisory only ( John Dee Ltd v Customs and Excise Commissioners [1995] STC 941 (“John Dee”)). Thus, on such an appeal, the task of the Tribunal is to consider whether HMRC had acted in a way in which no reasonable panel of commissioners could have acted or whether they had taken into account some irrelevant matter or had disregarded something to which they should have given weight. In doing so, the Tribunal is confined to considering facts and matters which existed at the time HMRC made their decision ( Customs and Excise Commissioners v Peachtree Enterprises Ltd [1994] STC 747 ) (“Peachtree”). The Tribunal might also have to consider whether the Commissioners had erred on a point of law. The Tribunal cannot, however, exercise a fresh discretion. If the decision is found to have been flawed, the appeal will be allowed, and HMRC may make a further determination if they so choose.

15. However, there is a significant difference in the way the VAT security provisions and the PAYE Regulations/NICs Regulations have been drafted. There is nothing in the VAT security provisions corresponding to the powers expressly given to the Tribunal, in Reg 97V(5) of the PAYE Regulations, to vary the requirements in the notice.

16. In D-Media Communications Ltd v HMRC [2016] UKFTT 430 (“D-Media”), Judge Berner expressed the view that the supervisory approach, that is to say having regard to the reasonableness of HMRC’s decision, is limited to the matter referred to in reg. 97N, namely whether the giving of security is necessary for the protection of the revenue. The Tribunal may nevertheless form its own view as to the matters specified in the Notice, including the amount, manner, timing and duration of the security requirement, thereby adopting an appellate approach in relation to those matters. This is set out at [21] of D-Media: “That includes whether the appellant is a person from whom security may be required, the value of the security to be given, the manner in which it is to be given, the date on which it is to be provided and the period of time for which the security is required. The value of the security and the manner in which it is to be provided are included amongst these matters; in contrast to the VAT security provisions which provide, at para 4(4), that the security is to be of such amount and given in such manner as HMRC shall determine, the PAYE Regulations merely require those matters to be specified in the Notice, and the power of the Tribunal to vary the requirements in the Notice, in my view, renders these matters susceptible to substitution of the Tribunal's own view.” 17. In

Boship Lions Farm Hotel Ltd and others v HMRC [2018] UKFTT 411 (TC), the Tribunal held that it could only consider facts as they were at the time the decision to require security was taken. This is the supervisory approach — assessing only the reasonableness of the original decision on the information then available. However, the Tribunal in that case was not referred to D-Media. Boship Lions did not reject the appellate approach in terms, but it is clear from the decision that the Tribunal in that case considered its jurisdiction to be supervisory only.

18. In Quadragina Ltd and Charles Horder v The Commissioners for Her Majesty's Revenue and Customs [2019] UKFTT 0639 (TC) (“Horder and Quadragina”) Judge Mosedale agreed with D-Media that the Tribunal did have an appellate jurisdiction over the amount of the security. It is noted that counsel for the Appellants submitted that the Tribunal’s jurisdiction was entirely appellate including in VAT security cases, and that John Dee was (he submitted) wrongly decided and not binding. However, Judge Mosedale stated [103] that: “I do not really need to consider this because it is clear the Tribunal does have appellate jurisdiction over the amount of the NOR which, as I have said, amounts to full appellate jurisdiction over the dispute where the NOR was reasonably issued in the first place.” 19. Mr Horder appealed the First-tier Tribunal’s decision in Horder and Quadragina and it was considered by the Upper Tribunal (Tax & Chancery Chamber) (“UT”). In Charles Horder v The Commissioners for Her Majesty's Revenue and Customs [2023] UKUT 00106 (TCC) the UT specifically declined to determine the issue of the First-tier Tribunal’s jurisdiction, stating at [77] to [79]: “77. HMRC submitted a Reply to Mr Horder's Notice of Appeal. In short, HMRC contended that the FTT had erred in concluding that Mr Horder's appeal (if permission for a late appeal had been granted) would have been "very likely" to have succeeded. HMRC contended that the FTT's jurisdiction was supervisory only rather than, as the FTT considered, akin to a full appellate jurisdiction. Moreover, the FTT was confined to reviewing the reasonableness of the NOR on the basis of the facts known to the relevant officer at the time the NOR was issued.

78. This issue only arose if we upheld one of Mr Horder's two Grounds of Appeal. If we dismissed Mr Horder's appeal on both of those Grounds, HMRC requested that we should not deal with this jurisdictional issue, leaving it to be decided in a future appeal where the issue was live.

79. Because we have decided to dismiss Mr Horder's appeal on both Ground 2 and Ground 4, the issue of the FTT's jurisdiction does not arise and, consequently, we consider it would be preferable not to decide the point.” 20. In Blocksure Limited v HMRC [2024] UKFTT 397 (TC), HMRC submitted that the interpretation of the PAYE and NIC Regulations in D-Media was incorrect, and that the Tribunal’s jurisdiction was purely supervisory. However in the Tribunal’s decision at [118], Judge Gauke declined to make any findings on the correctness of the approach taken in D- Media.

21. In Duma & Rockey v HMRC [2026] UKFTT 00262 (TC) (“Duma”), the Tribunal set aside security notices where the company had ceased trading, rejecting HMRC's argument for a purely supervisory jurisdiction, treating the Tribunal's powers under Reg 97V(5) as fully appellate.

22. HMRC submitted that the Tribunal's jurisdiction is confined to reviewing the reasonableness of the decision to issue the NORs and does not extend to varying the amount of security required. In support of that submission HMRC relied on the approach adopted in Rosebronze Ltd v Commissioners of Customs and Excise (LON/84/154) and the authorities concerning security for VAT, including John Dee.

23. However, the VAT authorities on which HMRC relies were decided under a statutory regime which contains no equivalent to Reg 97V(5). The PAYE Regulations expressly empower the Tribunal to vary the requirements specified in a notice and, in our view, that statutory power is difficult to reconcile with HMRC's submission that the Tribunal's jurisdiction is purely supervisory.

24. During the hearing we invited HMRC to address the significance of the express power conferred on the Tribunal by Reg 97V(5) of the PAYE Regulations and paragraph 29V(5) of Schedule 4 to the NICs Regulations to "vary the requirements in the notice", and in particular to explain how that provision could be reconciled with HMRC's submission that the Tribunal's jurisdiction is no different from its jurisdiction in VAT security cases. HMRC was unable to provide an explanation.

25. In our view, the Tribunal's jurisdiction in relation to PAYE and NIC security notices is mixed in nature. The question whether security is necessary for the protection of the revenue under Reg 97N is supervisory. In determining that question, the Tribunal does not substitute its own view for that of HMRC but asks whether HMRC's decision fell within the range of reasonable decisions open to it. By contrast, where the Tribunal is exercising its jurisdiction in relation to the requirements specified in the notice, its function is appellate rather than supervisory. In principle, that jurisdiction permits the Tribunal to form its own view of those matters and, if appropriate, to vary the requirements contained in the notice.

26. That distinction has important consequences for the evidence to which the Tribunal may properly have regard. In determining the supervisory question of necessity, the Tribunal will consider only the information available to HMRC at the time the NOR was issued. By contrast, when exercising its appellate jurisdiction, the Tribunal may take into account all of the evidence before it, including material that has emerged since the NOR was issued.

GROUNDS OF APPEAL 27. The Appellants contend that HMRC ought not to have issued the NORs because the Company's failure to pay PAYE and NIC liabilities arose from exceptional cashflow difficulties rather than any unwillingness to meet its tax obligations.

28. The Appellants state that a significant customer entered liquidation, resulting in a loss of approximately £160,000 to the Company. They submit that this had a substantial adverse impact on the Company's cashflow and trading position.

29. The Appellants further submit that replacement customers generally operated with lower credit limits and paid more slowly than the customer whose business had been lost. They contend that they also experienced bad debts from some new customers.

30. The Appellants say that those factors adversely affected the Company's relationship with its invoice factoring provider, limiting the funds available to the Company and compounding its cashflow difficulties.

31. The Appellants also rely on the fact that the Company was expecting a repayment in respect of Research and Development tax relief which, they say, would assist in reducing the PAYE and NIC arrears.

32. In summary, the Appellants submit that the Company's payment difficulties were temporary in nature, that steps were being taken to improve its financial position, and that HMRC ought to have afforded the Company additional time to refinance its business and discharge the outstanding liabilities rather than requiring security in the amount specified in the NORs.

CASE MANAGEMENT ISSUE 33. On 7 August 2026, HMRC applied for permission to rely on a witness statement served that day. The Tribunal directed that any objection to the application should be raised at the commencement of the hearing.

34. At the start of the hearing, Mr Lees confirmed on behalf of the Appellants that no objection was taken to the admission of the witness statement. The Tribunal therefore admitted the witness statement into evidence. Mr Lees declined the opportunity to cross examine the witness.

FINDINGS OF FACT 35. During 2023 the Company accrued substantial PAYE and NIC liabilities which were not paid in full by the due dates. On 27 September 2023 HMRC issued a warning letter advising that a Notice of Requirement might be issued unless the outstanding liabilities were paid and future liabilities were submitted and paid on time. At that time HMRC recorded outstanding PAYE liabilities of £55,639.26 and NIC liabilities of £56,752.24.

36. On 29 November 2023 HMRC issued a further warning letter. HMRC's records showed total outstanding PAYE and NIC liabilities of £195,253.53 at that date.

37. Time to Pay arrangements were subsequently agreed between the Company and HMRC. The documentary evidence shows that HMRC continued to monitor the Company's compliance position throughout 2024. In discussions with HMRC during September 2024 Mr Lees informed HMRC that the 38. Company was experiencing cashflow difficulties and was awaiting payment of invoices from customers. A further Time to Pay arrangement was agreed.

39. HMRC issued a further warning letter on 27 September 2024. Thereafter the Company made substantial payments and certain earlier PAYE and NIC liabilities were cleared.

40. On 2 January 2025 HMRC authorised a Notice of Requirement in respect of PAYE and NIC liabilities. Following payment by the Company of approximately £55,000 and representations that steps had been taken to secure future compliance, HMRC withdrew that Notice of Requirement on 4 February 2025. In its withdrawal letter HMRC stated that it would continue to monitor the Company's compliance position and that a further security notice might be issued if liabilities were not paid in full and on time.

41. On 13 June 2025 HMRC issued the NORs which are the subject of this appeal. The NORs required the Company and its directors to provide security in the total amount of £150,109.12, comprising PAYE security of £68,351.04 and NIC security of £81,758.08. HMRC required the security to be provided by 23 July 2025 and specified a holding period of 24 months.

42. HMRC calculated the security by reference to a four-month estimated PAYE liability of £49,219.00, a four-month estimated NIC liability of £57,754.00, PAYE arrears of £19,132.04 and NIC arrears of £24,004.08.

43. The Appellants appealed the NORs on 25 June 2025. In their appeal they explained that the Company had experienced significant cashflow difficulties following the insolvency of a major customer, resulting in a loss of approximately £160,000. They further stated that replacement customers paid more slowly, that some debts had proved irrecoverable and that those matters had adversely affected the Company's financing arrangements.

44. The Appellants also informed HMRC that the Company expected to receive a repayment in respect of Research and Development tax relief and that receipt of those funds would assist in reducing the outstanding PAYE and NIC liabilities.

45. HMRC maintained the NORs in View of the Matter letters dated 9 July 2025 and subsequently upheld them by review conclusion dated 19 September 2025. The Appellants notified their appeal to the Tribunal on 15 October 2025.

46. We find that, as at 13 June 2025, HMRC was aware of a history of recurring PAYE and NIC arrears, previous warning letters, earlier Time to Pay arrangements, the withdrawal of a previous Notice of Requirement in February 2025 and the subsequent accrual of further PAYE and NIC liabilities. We further find that HMRC was aware of the Company's explanation that those payment difficulties arose from cashflow pressures associated with customer insolvency and delayed customer payments.

47. We find that the Company's PAYE and NIC indebtedness increased substantially after the issue of the NORs. By the date of the hearing HMRC's records showed liabilities of £443,403.99, including interest and late payment penalties.

DISCUSSION 48. The issue for the Tribunal is whether HMRC's decision that the provision of security was necessary for the protection of the revenue fell within the range of reasonable decisions open to it on 13 June 2025.

49. We accept that the Company experienced genuine commercial difficulties. Mr Lees explained that a significant customer had entered liquidation, that the Company had suffered a substantial loss as a consequence, and that replacement customers did not provide the same level of financial security or prompt payment. We also accept that those matters contributed to the Company's cashflow difficulties.

50. However, those matters do not determine the issue before us. The question is not whether the Company had an explanation for its payment difficulties, nor whether the Company remained a viable business. The question is whether HMRC could reasonably regard the provision of security as necessary for the protection of the revenue. In our view, there was ample material before HMRC from which it could reasonably 51. reach that conclusion. By June 2025 HMRC was aware of a lengthy history of PAYE and NIC arrears, multiple warning letters and repeated failures to pay liabilities by the due date. HMRC had also entered into Time to Pay arrangements with the Company on more than one occasion.

52. Moreover, HMRC had previously authorised a Notice of Requirement in January 2025. That notice was withdrawn in February 2025 after the Company made a payment of approximately £55,000 and represented that steps had been taken to secure future compliance. HMRC was therefore entitled to regard the withdrawal of that notice as affording the Company a further opportunity to demonstrate that future PAYE and NIC liabilities would be paid on time.

53. Despite that opportunity, further PAYE and NIC liabilities accrued before the issue of the NORs on 13 June 2025. HMRC was entitled to regard that fact as demonstrating a continuing risk to the revenue. Indeed, from HMRC's perspective, the very circumstances which the Appellants relied upon to explain the arrears also indicated an ongoing vulnerability in the Company's cashflow and therefore an ongoing risk that future liabilities might not be paid as they fell due.

54. We accept that the Company was hopeful of receiving funds from a Research and Development tax relief claim and that it anticipated an improvement in its financial position. However, HMRC was not required to proceed on the basis that anticipated future receipts would necessarily materialise or be sufficient to secure future compliance. HMRC was entitled to assess the position by reference to the Company's established compliance history and the information available to it at the time.

55. Viewing the matter as at 13 June 2025, we are satisfied that HMRC took account of the relevant considerations, including the Company's explanation for its financial difficulties. There is no evidence that HMRC took account of any irrelevant consideration or failed to have regard to a matter which ought properly to have been considered.

56. Standing back and considering the position as a whole, we conclude that HMRC's decision that security was necessary for the protection of the revenue was one that was reasonably open to it. The Appellants have therefore failed to establish any basis upon which the Tribunal could interfere with that aspect of the NORs.

57. As we have already explained, our jurisdiction is not confined to a supervisory review of HMRC's decision that security was necessary for the protection of the revenue. We also possess an appellate jurisdiction in relation to the requirements specified in the NORs, including the amount, timing, duration and manner of the security required.

58. However, the Appellants did not advance any specific challenge to the amount of the security, the period for which it was to be held, the manner in which it was to be provided or the persons from whom it was required. In any event, the post-NOR evidence before us provides no basis for varying the substantive requirements contained in the NORs in favour of the Appellants. On the contrary, the evidence shows that the Company's PAYE and NIC indebtedness increased substantially following the issue of the NORs, reaching £443,403.99 by the date of the hearing.

59. Accordingly, we decline to vary the amount of security required, the period for which it is to be held, the manner in which it is to be provided, or the persons from whom it is required, and we otherwise confirm the NORs.

60. The Appellants did, however, request additional time within which to provide the security.

61. HMRC submitted that if its argument that the Tribunal's jurisdiction was purely supervisory were correct, the Tribunal would have no power to alter the date by which the security must be provided unless the NORs themselves were successfully challenged. However, HMRC accepted that if the Tribunal concluded that it possessed such a power, it did not oppose an extension of the compliance period to 60 days.

62. Regulation 97V(7)(a) provides that, on the final determination of an appeal, security is due on the 30th day after the day on which the determination is made, "subject to any alternative determination by a tribunal or court". In our view, that provision confers an express power on the Tribunal to determine a different date for compliance following the determination of an appeal. The exercise of that power does not depend upon the Tribunal first concluding that the NOR was unreasonably issued and should be set aside or varied.

63. In light of that conclusion, and bearing in mind that HMRC does not oppose such an order, we consider it appropriate to determine that the security be provided within 60 days of the date of this decision.

64. Accordingly, the appeal is dismissed and the NORs are confirmed. Pursuant to Reg 97V(7)(a), however, we determine that the security required by the NORs shall be provided within 60 days of the date of this decision.

RIGHT TO APPLY FOR PERMISSION TO APPEAL 65. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First- tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 28 August 2026 Appendix Income Tax (Pay As You Earn) Regulations 2003, Part 4A 97M Interpretation In this Part— “a further notice” has the meaning given in regulation 97U(3); and “PGS” has the meaning given in regulation 97S(1). 97N Requirement for security (1) 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 , as adjusted by regulation 67H(2) where appropriate, 68 or 80 (payments to HMRC and determination of unpaid

amounts). (2) Paragraph (1) does not apply to any amount which the employer is required to pay to HMRC that relates to income to which Part 8 (social security benefits) applies. 97O Employers (1) The employer is any employer other than— (a) the Crown, (b) an employer to whom paragraph (2) applies, (c) …and (d) a care and support employer within the meaning given by regulation 206(4) (employers). (2) This paragraph applies to employers who at the relevant time could not be liable to a penalty under Schedule 56 to the Finance Act 2009 by virtue of paragraph 10 of that Schedule (suspension of penalty for failure to make payments on time during currency of agreement for deferred payment). (3) In paragraph (2), the relevant time is a time at which, but for paragraph (1)(b), the officer would require security. 97P Persons from whom security can be required (1) The persons are— (a) the employer, (b) any of the following in relation to the employer— (i) a director, (ii) a company secretary, (iii) any other similar officer, or (iv) any person purporting to act in such a capacity, and (c) in a case where the employer is a limited liability partnership, a member of the limited liability partnership. (2) An officer of Revenue and Customs may require— (a) a person to give security or further security of a specified value in respect of the employer, or (b) more than one person to give

security or further security of a specified value in respect of the employer, and where the officer does so those persons shall be jointly and severally liable to give that security or further security. 97Q Notice of requirement (1) 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. (2) The notice must include, or be accompanied by, an explanation of— (a) the employer's right to make a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 , and (b) the effect of regulation 97R(2) and (3) (date on which security is due). (3) In a case which falls within regulation 97P(2)(b) , the notice must include, or be accompanied by, the names of each other person from whom security is required. (4) The notice may contain such other information as the officer considers necessary. (5) A person shall not be treated as having been required to provide security unless HMRC comply with this regulation and regulation 97R(1) . 97R Date on which security is due (1) The date specified under regulation 97Q(1)(c) (notice of requirement) may not be earlier than the 30th day after the

day on which the notice is given. (2) If, before the date specified under regulation 97Q(1)(c) , the employer makes a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 , the requirement to give security on or before that date does not apply. (3) In a case which falls within paragraph (2), if HMRC does not agree to the employer's request, security is to be given on or before the 30th day after the day on which HMRC notifies the employer of that decision. 97S Application for reduction in the value of security held (1) A person who has given security (“PGS”) may apply to an officer of Revenue and Customs for a reduction in the value of security held by HMRC if— (a) PGS' circumstances have changed since the day the security was given because— (i) of hardship, or (ii) PGS has ceased to be a person mentioned in regulation 97P(1) (person from whom security can be required), or (b) since the day the security was given there has been a significant reduction in the number of employees of the employer to whom the security relates or that employer has ceased to be an employer. (2) Where regulation 97P(2)(b) applies, a person who has not contributed to the value of the security given may not make an application under paragraph (1). 97T Outcome of application for reduction in the value of security held (1) If an application under regulation 97S(1) (application for

reduction in the value of security held) is successful, the officer must inform PGS of the reduced value of security that is still required or, where that value is nil, that the requirement for security has been cancelled. (2) HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of security held. 97U Outcome of application for reduction in the value of security held: further provision (1) This regulation applies— (a) in cases which fall within regulation 97P(2)(b) , and (b) where PGS' application is made under regulation 97S(1)(a) . (2) As a consequence of arrangements made under regulation 97T(2) (outcome of application for reduction in the value of security held), an officer of Revenue and Customs may require any other person who was given notice under regulation 97Q (notice of requirement) in relation to the security (“the original security”), or any other person mentioned in regulation 97P(1) , to provide security in substitution for the original security. (3) Where an officer of Revenue and Customs acts in reliance on paragraph (2), the officer must give notice (“a further notice”). (4) Regulation 97Q and regulation 97R (date on which security is due) apply in relation to a further notice. (5) Subject to paragraph (6), regulation 97V(1) (appeals) applies in relation to a further notice. (6) A person who is given a further notice

and who was also given notice under regulation 97Q in relation to the original security may only appeal on the grounds the person is not a person mentioned in regulation 97P(1) . 97V Appeals (1) A person who is given notice under regulation 97Q may appeal against the notice or any requirement in it. (2) PGS may appeal against— (a) the rejection by an officer of Revenue and Customs of an application under regulation 97S(1) , and (b) a smaller reduction in the value of security held than PGS applied for. (3) Notice of an appeal under this regulation must be given— (a) before the end of the period of 30 days beginning with— (i) in the case of an appeal under paragraph (1), the day after the day on which the notice was given, and (ii) in the case of an appeal under paragraph (2), the day after the day on which PGS was notified of the outcome of the application, and (b) to the officer of Revenue and Customs by whom the notice was given or the decision on the application was made, as the case may be. (4) Notice of an appeal under this regulation must state the grounds of appeal. (5) On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may— (a) confirm the requirements in the notice, (b) vary the requirements in the notice, or (c) set aside the notice. (6) On an appeal under paragraph (2) that is notified to the tribunal, the tribunal may— (a) confirm the

decision on the application, or (b) vary the decision on the application. (7) On the final determination of an appeal under this regulation— (a) subject to any alternative determination by a tribunal or court, any security to be given is due on the 30th day after the day on which the determination is made, or (b) HMRC may make such arrangements as it sees fit to ensure the necessary reduction in the value of security held. (8) An appeal under this regulation is subject to the provisions of Part 5 of TMA (appeals and other proceedings) apart from— (a) section 46D , (b) section 47B , (c) section 50(6) to (9) , and (d) sections 54A to 57 . 97W Appeals: further provision for cases which fall within regulation 97R(2) In a case which falls within regulation 97R(2) (date on which security is due), if the request mentioned in that provision is made before an appeal under regulation 97V(1) (appeals), regulation 97V(3)(a)(i) applies as if the words “the day after the day on which the notice was given” were “the day after the day on which HMRC notifies the employer of its decision”. 97X Offence (1) For the purposes of section 684(4A) of ITEPA (PAYE regulations—security for payment of PAYE: offence)— (a) in relation to a requirement for security under a notice under regulation 97Q (notice of requirement) the period specified is the period which starts with the day the notice is given and

ends with— (i) the first day after the date specified under regulation 97Q(1)(c) , or (ii) in a case which falls within regulation 97R(2) , the first day after the date determined under regulation 97R(3) , (b) in relation to a requirement for security under a further notice the period specified is the period which starts with the day the further notice is given and ends with— (i) the first day after the date specified under regulation 97Q(1)(c) as it applies in relation to the further notice, or (ii) in a case which falls within regulation 97R(2) , the first day after the date determined under regulation 97R(3) as it applies in relation to the further notice, and (c) in relation to a requirement for security to which regulation 97V(7)(a) applies the period specified is the period which starts with the day the determination is made and ends with the first day after— (i) the day the tribunal or court determines to be the day that the security is to be given, or (ii) the day determined in accordance with that regulation, as the case may be. Social Security (Contributions) Regulations 2001 Schedule 4, Part 3B Interpretation 29M— In this Part— “employer” has the meaning given in paragraph 29O(1); “a further notice” has the meaning given in paragraph 29U(3); “PGS” has the meaning given in paragraph 29S(1). Requirement for security 29N— In circumstances where an officer of Revenue and

Customs considers it necessary for the protection of Class 1 contributions, the officer may require a person described in paragraph 29P(1) to give security or further security for the payment of amounts which an employer is or may be liable to pay to HMRC under paragraph 10, 11, 11ZA or 11A. Employers (1) An “employer” is any employer within the meaning given in paragraph 1(2) other than— (a) the Crown; (b) a person to whom sub-paragraph (2) applies; (c) …and (d) a care and support employer within the meaning given in regulation 90NA(3) of these Regulations. (2) This sub-paragraph applies to persons who at the relevant time could not be liable to a penalty under Schedule 56 to the Finance Act 2009 by virtue of paragraph 10 of that Schedule (suspension of penalty for failure to make payments on time during currency of agreement for deferred payment). (3) In sub-paragraph (2), the relevant time is a time at which, but for sub-paragraph (1)(b), the officer would require security. Persons from whom security can be required (1) The persons are— (a) the employer; (b) any of the following in relation to the employer— (i) a director; (ii) a company secretary; (iii) any other similar officer; or (iv) any person purporting to act in such a capacity; and (c) in a case where the employer is a limited liability partnership, a member of the limited liability partnership. (2) An officer of

Revenue and Customs may require— (a) a person to give security or further security of a specified value in respect of the employer; or (b) more than one person to give security or further security of a specified value in respect of the employer, and where the officer does so those persons shall be jointly and severally liable to give that security or further security. Notice of requirement (1) 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. (2) The notice must include, or be accompanied by, an explanation of— (a) the employer's right to make a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 ; and (b) the effect of paragraph 29R(2) and (3). (3) In a case which falls within paragraph 29P(2)(b), the notice must include, or be accompanied by, the names of each other person from whom security is required. (4) The notice may contain such other information as the officer considers necessary. (5) A person shall not be treated as having been required to provide security unless HMRC comply with this paragraph and paragraph 29R(1). (6) Notwithstanding anything

in regulation 1(4)(b) , where the notice, or a further notice, (“contributions notice”) is to be given with a notice or further notice mentioned in regulations 97Q(1) and 97U(3) of the PAYE Regulations (“PAYE notice”) the contributions notice shall be taken to be given at the same time that the PAYE notice is given. Date on which security is due (1) The date specified under paragraph 29Q(1)(c) may not be earlier than the 30th day after the day on which the notice is given. (2) If, before the date specified under paragraph 29Q(1)(c), the employer makes a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 , the requirement to give security on or before that date does not apply. (3) In a case which falls within sub-paragraph (2), if HMRC does not agree to the employer's request, security is to be given on or before the 30th day after the day on which HMRC notifies the employer of that decision. Application for reduction in the value of security held (1) A person who has given security (“PGS”) may apply to an officer of Revenue and Customs for a reduction in the value of security held by HMRC if— (a) PGS' circumstances have changed since the day the security was given because— (i) of hardship; or (ii) PGS has ceased to be a person mentioned in paragraph 29P(1); or (b) since the day the security was given there has been a significant reduction in the number of

employed earners of the employer to whom the security relates or that employer has ceased to be an employer. (2) Where paragraph 29P(2)(b) applies, a person who has not contributed to the value of the security given may not make an application under sub-paragraph (1). Outcome of application under paragraph 29S (1) If an application under paragraph 29S(1) is successful, the officer must inform PGS of the reduced value of security that is still required or, where that value is nil, that the requirement for security has been cancelled. (2) HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of security held. Outcome of application under paragraph 29S: further provision (1) This paragraph applies— (a) in cases which fall within paragraph 29P(2)(b); and (b) where PGS' application is made under paragraph 29S(1)(a). (2) As a consequence of arrangements made under paragraph 29T(2), an officer of Revenue and Customs may require any other person who was given notice under paragraph 29Q in relation to the security (“the original security”), or any other person mentioned in paragraph 29P(1), to provide security in substitution for the original security. (3) Where an officer of Revenue and Customs acts in reliance on sub-paragraph (2), the officer must give notice (“a further notice”). (4) Paragraph 29Q(1) to (5) and paragraph 29R apply in

relation to a further notice. (5) Subject to sub-paragraph (6), paragraph 29V(1) applies in relation to a further notice. (6) A person who is given a further notice and who was also given notice under paragraph 29Q in relation to the original security may only appeal on the grounds that the person is not a person mentioned in paragraph 29P(1). Appeals (1) A person who is given notice under paragraph 29Q may appeal against the notice or any requirement in it. (2) PGS may appeal against— (a) the rejection by an officer of Revenue and Customs of an application under paragraph 29S(1); and (b) a smaller reduction in the value of security held than PGS applied for. (3) Notice of an appeal under this paragraph must be given— (a) before the end of the period of 30 days beginning with— (i) in the case of an appeal under sub-paragraph (1), the day after the day on which the notice was given; and (ii) in the case of an appeal under sub-paragraph (2), the day after the day on which PGS was notified of the outcome of the application; and (b) to the officer of Revenue and Customs by whom the notice was given or the decision on the application was made, as the case may be. (4) Notice of an appeal under this paragraph must state the grounds of appeal. (5) On an appeal under sub-paragraph (1) that is notified to the tribunal, the tribunal may— (a) confirm the requirements in the notice; (b)

vary the requirements in the notice; or (c) set aside the notice. (6) On an appeal under sub-paragraph (2) that is notified to the tribunal, the tribunal may— (a) confirm the decision on the application; or (b) vary the decision on the application. (7) On the final determination of an appeal under this paragraph— (a) subject to any alternative determination by a tribunal or court, any security to be given is due on the 30th day after the day on which the determination is made; or (b) HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of the security held. (8) Part 5 of the Taxes Management Act 1970 (appeals and other proceedings) applies in relation to an appeal under this paragraph as it applies in relation to an appeal under the Taxes Acts but as if— (a) sections 46D, 47B, 50(6) to (9) and (11)(c) and 54A to 57 were omitted; and (b) in section 48(1) — (i) in paragraph (a) the reference to “the Taxes Acts” were a reference to “ paragraph 29V of Schedule 4 to the Social Security (Contributions) Regulations 2001 ”; and (ii) in paragraph (b) the reference to “any provision of the Taxes Acts” were a reference to “ paragraph 29V of Schedule 4 to the Social Security (Contributions) Regulations 2001 ”. Appeals: further provision for cases which fall within paragraph 29R 29W— In a case which falls within paragraph 29R(2), if the request

mentioned in that provision is made before an appeal under paragraph 29V(1), paragraph 29V(3)(a)(i) applies as if the words “the day after the day on which the notice was given” were “the day after the day on which HMRC notifies the employer of its decision”. Offence (1) Section 684(4A) of the Income Tax (Earnings and Pensions) Act 2003 (PAYE regulations – security for payment of PAYE: offence) applies in relation to a requirement imposed under these Regulations as it applies in relation to a requirement imposed under the PAYE Regulations . (2) For the purposes of section 684(4A) as it applies by virtue of sub-paragraph (1)— (a) in relation to a requirement for security under a notice under paragraph 29Q the period specified is the period which starts with the day the notice is given and ends with — (i) the first day after the date specified under paragraph 29Q(1)(c); or (ii) in a case which falls within paragraph 29R(2), the first day after the date determined under paragraph 29R(3); (b) in relation to a requirement for security under a further notice the period specified is the period which starts with the day the further notice is given and ends with— (i) the first day after the date specified under paragraph 29Q(1)(c) as it applies in relation to the further notice; or (ii) in a case which falls within paragraph 29R(2), the first day after the date determined under

paragraph 29R(3) as it applies in relation to the further notice; and (c) in relation to a requirement for security to which paragraph 29V(7)(a) applies the period specified is the period which starts with the day the determination is made and ends with the first day after— (i) the day the tribunal or court determines to be the day that the security is to be given; or (ii) the day determined in accordance with that paragraph, as the case may be. 17