15 May 2026
HM Revenue and Customs (HMRC) has seen an increase in customers attempting to use ‘Bills of Exchange’ to pay tax liabilities. Promoters are claiming that these are valid forms of payment to HMRC and are legal under the Bills of Exchange Act 1882. However, HMRC does not accept Bills of Exchange as a valid form of payment. Payroll providers working in recruitment and temporary labour sector are being particularly targeted.
A Bill of Exchange is defined in the Bills of Exchange Act 1882. It is a note from one person to another, requiring that person to pay a certain sum of money to them or to a third party. However, it is up to the recipient to decide whether to accept the Bill as a form of payment. Even when the Bill has been drawn up according to the legislation, the recipient has no legal obligation to accept it.
Alternative phrasing used to market this arrangement include reference to money orders, Public Trusts, Merchant Law or Negotiable Instruments. It is also being sold as a way to avoid the new umbrella company legislation which was introduced from April 2026. Please refer to the guidance on Income Tax rules to tackle non-compliance within umbrella companies on GOV.UK for further information regarding the changes made.
Using this arrangement could cost businesses a great deal of money, with fees paid to promoters for using or facilitating their payment model, or, in fines, penalties or interest to HMRC where liabilities have not been paid in full.
It is essential that businesses do their due diligence and seek professional advice before signing up to tax-saving schemes and not rely on promises made to compliance. If a business believes it is using this payment arrangement, they can notify HMRC on Report tax fraud or avoidance to HMRC - GOV.UK or they can phone HMRC to report tax fraud or avoidance.
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