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HMRC issue fraud warning over Bills of Exchange payment promise

HMRC have published a warning over fraudulent payment schemes involving 'Bills of Exchange’.

Bills of Exchange are being incorrectly marketed as a way to clear debts with HMRC, often by promoters with links to organised crime. Their target audience can be taxpayers in any sector, but will commonly include employers, recruitment agencies and temporary labour suppliers. 

What is a Bill of Exchange?

A Bill of Exchange is a legal form of payment, established by the Bills of Exchange Act 1882.  They are an unconditional offer from one person to pay a sum of money to another person. However, they are not legal tender in any part of the UK and the recipient is under no obligation to accept them. 

Alternative terms used by promoters might include promissory notes, public trusts, money orders or negotiable instruments. 

What’s HMRC’s view?

HMRC do not accept Bills of Exchange, either for payment of tax liabilities or as a way of clearing existing debt. 

How do the schemes work?

Promoters offer Bills of Exchange as a way of making payment to HMRC, often claiming that they can wipe out a tax debt. They will normally offer to manage the whole process, including drawing up the legal paperwork required and dealing with HMRC on behalf of the taxpayer. 

In return, promoters commonly charge a fee calculated as percentage of the tax due, often with a proportion of that fee due before they begin work. 

HMRC will not accept payments in the form of Bills of Exchange. Taxpayers attempting to pay in this way will be left out of pocket for the promoter’s fee, andalso have to pay  their existing tax debt along with any further interest and penalties that HMRC may charge where tax is not paid in full by the due date. 

What should you do if you’re offered a Bill of Exchange scheme?

A good defence against fraudulent payment schemes is to exercise caution and suspicion over any unusual payment methods. 

HMRC publish accepted payment methods for the various taxes and duties under their administration. If you’re offered an unusual payment method, check whether it is approved by HMRC before proceeding. 

As tends to be the way with tax schemes – if something seems too good to be true, it normally is. Schemes may be advertised as being approved by HMRC and by Kings Counsel (KC). Neither statement is true. If in doubt, seek independent professional advice.

If you come across a payment method that looks suspicious you can report it using HMRC’s report tax fraud or avoidance form, or by phoning HMRC to report tax fraud. Reports can be submitted anonymously. 

 

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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