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HMRC warns taxpayers against using Bills of Exchange

Author: ICAEW Insights

Published: 22 May 2026

Contents
HMRC does not accept Bills of Exchange as payment of tax liabilities. Taxpayers who enter into arrangements that attempt to use Bills of Exchange in this way could face additional interest and penalties.
In a technical note, HMRC has warned that promoters are marketing the use of Bills of Exchange to pay tax liabilities. The promotional material may also include reference to money orders, Public Trusts, Merchant Law or Negotiable Instruments. HMRC says that promoters appear to be particularly active in the recruitment and temporary labour sector, where they may claim that using Bills of Exchange can avoid the new umbrella company legislation introduced from April 2026.

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What is a Bill of Exchange? 

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.

HMRC’s view on the use of Bills of Exchange  

HMRC says that it does not accept Bills of Exchange against a tax liability and that tax liabilities must be settled using HMRC’s normal payment methods. HMRC may charge additional interest and penalties, and use its enforcement powers to collect outstanding amounts, where Bills of Exchange are used in this way.  

HMRC’s advice to taxpayers who are considering entering into such arrangements is to undertake their own “robust due diligence” and seek independent professional advice. Taxpayers should not rely on the fact that they were told the arrangements were fully compliant, says HMRC.  

Action required 

HMRC is encouraging taxpayers who have already entered into arrangements involving Bills of Exchange to contact HMRC as soon as possible. Options available to the taxpayer including making a disclosure to HMRC.

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