When can HMRC require a security cash deposit?

HMRC may require a security cash deposit when payment is seriously at risk. This typically applies in situations where there is a significant concern about whether the taxpayer will be able to fulfill their payment obligations. The rationale behind this measure is to protect public revenue by ensuring that funds are secured upfront in cases where previous payment history indicates a pattern of non-compliance or where there are serious concerns regarding the taxpayer's financial stability.

This approach allows HMRC to mitigate potential losses from payments that are unlikely to be made in the future, thus safeguarding the integrity of the tax system. In circumstances where financial risk is elevated, requiring a security cash deposit serves as an assurance to HMRC that they will collect the owed amounts despite any uncertainty regarding the taxpayer’s ability to pay.

The other scenarios presented do not align with the criteria under which HMRC would impose such a requirement. For instance, a minor discrepancy in payment or a good payment history suggests that the taxpayer is typically compliant and reliable, which would not warrant a security deposit. Similarly, consistently making payments on time indicates a low risk of non-payment, making it unnecessary for HMRC to ask for additional security.