HMRC warns businesses about fraudulent ‘Bills of Exchange’ schemes
HMRC has issued a warning about a new tax fraud scheme involving the use of Bills of Exchange to purportedly settle tax liabilities.
The arrangements are being promoted to employers, recruitment businesses and temporary labour agencies, although HMRC warns that any business could be targeted. Promoters claim that a Bill of Exchange can be used to eliminate a tax debt owed to HMRC, often offering to manage the process on behalf of clients and handle correspondence with HMRC.
A Bill of Exchange is a financial instrument defined under the Bills of Exchange Act 1882. However, while such instruments may be valid in certain commercial contexts, there is no legal obligation on a recipient to accept them as payment. HMRC has made it clear that it does not accept Bills of Exchange as a means of settling tax liabilities.
Businesses and advisers should be alert to marketing material that refers not only to Bills of Exchange, but also to terms such as “money orders”, “Public Trusts”, “Merchant Law” or “Negotiable Instruments”. HMRC has also highlighted misleading claims that these arrangements can circumvent the umbrella company legislation introduced from April 2026, or that they have been approved by King’s Counsel (KC) or accepted by HMRC. HMRC states that such claims are all false.
Taxpayers who use these arrangements risk significant financial consequences. In addition to fees charged by scheme promoters, businesses may remain liable for unpaid tax, together with interest, penalties and other charges arising from late payment.
HMRC have clear guidance on how to pay different taxes and duties including what to do if taxpayers have difficulties paying, as well as what will happen if you do not pay your tax bill.
The ATT encourage tax advisers to discuss this issue with their clients, particularly those operating in sectors commonly targeted by promoters. Where a client has already entered into one of these arrangements, HMRC advises that they should contact HMRC as soon as possible and consider making a voluntary disclosure to bring their affairs up to date.
Suspected tax fraud or avoidance schemes can be reported to HMRC anonymously through its online reporting service.