SG24100 - Security for tax at risk of being unpaid: risk assessing cases: is security action necessary?

You may have potential securities cases referred to you from a number of sources, for example from Local Compliance intervention teams and Debt Management, or you may self-source cases using HMRC’s electronic systems.

Deciding whether a security intervention is necessary means

• identifying an event such as non-payment or the failure to submit a return
• determining if the event might result in a loss of revenue, for example because assets disappear before they can be used to satisfy the tax debt
• considering any other circumstances that may mitigate the risk, for example the existence of substantial assets that might ultimately be converted to cash

then

• assessing whether or not there is likely to be a loss of revenue if no security action is taken.

The following cases are potentially high-risk

• multiple business failures (also known as phoenix traders), where the person concerned in the running of the business is connected with past failures to pay tax due, see SG24200
• businesses that fail to pay tax on time where the factors set out in SG24300 apply
• businesses run by “shadow” directors - undischarged bankrupts or persons otherwise disqualified from acting as directors, see SG24250
• businesses run by persons convicted of tax fraud.

At all times you should consider the implications of cross-tax working when reviewing potential security cases.

If you decide that the case is not suitable for a security intervention, but there are other risks on the case, forward it to the team that can best address those risks.