Tax compliance is not simply a matter of calculating what is owed. It also involves understanding how a liability should be settled, following the applicable rules, maintaining appropriate records, and making decisions that stand up to scrutiny.
At Liberty Rock, we regard these responsibilities as fundamental to professional advisory work. Clients entrust us with financial, commercial and structural matters, and they are entitled to advice that is clear, properly considered and aligned with applicable law and established regulatory practice.
This article sets out Liberty Rock’s position on tax payment methods, HMRC compliance and the importance of using recognised payment channels.
Our position on tax payment methods
Liberty Rock supports the use of payment methods that HM Revenue & Customs (HMRC) officially accepts for the settlement of tax liabilities.
This is an important distinction. A financial instrument may exist within a wider legal or commercial framework without necessarily being accepted by HMRC as a means of settling a tax debt.
The relevant question is therefore not simply whether an instrument exists or can be described using legal terminology. The practical question is whether HMRC accepts that instrument for the particular tax liability being settled.
HMRC’s published guidance provides a range of recognised payment methods depending on the type of tax and circumstances. These can include bank transfers, Faster Payments, CHAPS, Bacs, Direct Debit, debit cards and certain corporate credit card payments. Some liabilities may also be paid by cheque or through other specified channels where HMRC guidance permits it.
Our approach is straightforward: where HMRC has specified an accepted method of payment, that is the framework within which clients should operate.
Bills of exchange and HMRC tax liabilities
This position is particularly relevant to recent discussions around Bills of Exchange and similar private instruments.
In May 2026, HMRC published a specific tax fraud warning concerning schemes that promote Bills of Exchange as an alternative method of paying HMRC liabilities. HMRC stated clearly that it does not accept Bills of Exchange as payment against tax liabilities.
HMRC’s guidance also makes an important distinction between the existence of an instrument and whether a recipient is required to accept it.
A Bill of Exchange may be recognised within the framework of the Bills of Exchange Act 1882. That does not, by itself, mean that HMRC must accept such an instrument in satisfaction of a tax debt. HMRC has expressly stated that Bills of Exchange and similar private instruments cannot be used against a tax liability.
For clients and professional advisers, this distinction matters.
A proposed payment mechanism should not be evaluated solely on the basis that someone describes it as lawful, contractual or supported by a particular statutory reference. The receiving authority’s published position and applicable payment rules must also be considered.
At Liberty Rock, we do not promote or facilitate arrangements that contradict HMRC’s stated position on accepted tax payment methods.
What HMRC’s accepted payment channels look like
The appropriate payment method depends on the tax liability involved, the taxpayer’s circumstances and the instructions provided by HMRC.
For example, HMRC’s current Self Assessment guidance identifies several established methods, including online banking, Faster Payments, CHAPS, Bacs, Direct Debit and certain card payments. HMRC also provides specific instructions for payments made at banks or building societies where the relevant conditions are met.
For PAYE liabilities, HMRC similarly identifies online bank payments, debit or corporate credit cards, Faster Payments, CHAPS and Bacs among the available methods.
The practical lesson is that taxpayers should always check the current HMRC guidance applicable to their particular liability rather than relying on generic advice.
Payment references also matter. HMRC warns that using an incorrect reference can delay allocation of a payment or result in it being applied to the wrong liability.
Tax compliance therefore extends beyond having sufficient funds available. It includes making sure that the payment is made through the correct channel, using the correct reference and within the relevant deadline.
Our approach to tax-related advice
At Liberty Rock, we believe effective advisory work begins with understanding the facts.
Before recommending a course of action, relevant circumstances should be established and the client’s objectives clearly understood. Depending on the engagement, this may involve reviewing financial information, corporate structures, contractual arrangements, existing obligations, correspondence or other supporting documentation.
Our approach is structured around:
- establishing the relevant facts;
- identifying the client’s objectives;
- assessing available options;
- considering applicable legal and regulatory requirements;
- identifying material risks and limitations;
- documenting the basis for recommendations; and
- ensuring the client understands the implications of the proposed approach.
This process is particularly important where a proposed tax arrangement involves an unusual payment mechanism or interpretation of legislation.
The fact that an arrangement appears innovative does not automatically make it appropriate. A responsible adviser should consider whether the proposed approach is supported by the relevant authority, whether the receiving body recognises it and what risks could arise if the arrangement is rejected.
Client protection comes first
Professional advice should not be presented as a guarantee.
Where an issue involves significant uncertainty, regulatory interpretation or specialist legal questions, clients should understand that uncertainty before proceeding.
This is why Liberty Rock places importance on clear scopes of work and transparent communication.
Clients should be able to understand:
- what services are being provided;
- what matters fall outside the engagement;
- what information the advice is based upon;
- what assumptions have been made;
- what risks have been identified; and
- when additional legal, accounting or specialist advice may be appropriate.
We do not believe clients are best served by presenting complex arrangements as risk-free solutions.
The more significant the potential financial or regulatory consequences, the more important it becomes to distinguish established practice from untested or disputed propositions.
Compliance requires ongoing attention
Tax rules and administrative practices do not remain static.
HMRC regularly updates its published guidance, payment instructions and compliance communications. Its current payment guidance, for example, contains specific requirements around payment timing, available channels and payment references.
That means compliance should not be treated as a one-time exercise.
A payment method that was previously available may change. A particular interpretation may be challenged. New HMRC guidance may clarify an issue that was previously uncertain.
For professional advisers, maintaining awareness of these developments is part of responsible practice.
At Liberty Rock, we therefore seek to review our approach when material external developments affect the areas in which we advise clients.
Why accepted practice matters
There is a difference between pursuing legitimate tax planning and attempting to avoid an established payment requirement through a mechanism that the relevant authority does not recognise.
Legitimate tax planning operates within the applicable legal and regulatory framework. It requires careful consideration of the facts, the legislation, the relevant guidance and the risks associated with the proposed course of action.
Tax payment itself is more straightforward: the liability needs to be settled using a method HMRC accepts.
Where HMRC has explicitly rejected a particular instrument as a means of settling tax, treating that instrument as though it automatically discharges the liability creates unnecessary risk.
This is particularly important because an unsuccessful payment arrangement may not simply result in an administrative inconvenience. Depending on the circumstances, unpaid tax can lead to interest, penalties, enforcement action or other consequences.
Our commitment to responsible advisory practice
Liberty Rock’s position is deliberately clear.
We support tax compliance and the use of payment methods accepted by HMRC. We do not promote Bills of Exchange or similar private instruments as substitutes for HMRC’s recognised payment channels where HMRC has expressly stated that those instruments are not accepted.
Our wider approach is based on transparency, documented reasoning, appropriate risk disclosure and a focus on sustainable outcomes rather than short-term mechanisms.
For clients, this means asking the right questions before proceeding with any tax-related arrangement.
Is the payment method accepted by HMRC? Is the relevant guidance current? What happens if HMRC rejects the proposed method? Has the advice considered the client’s specific circumstances? Are the risks and limitations clearly understood?
These are practical questions, but they are central to responsible decision-making.
Looking ahead
Regulatory expectations and HMRC compliance priorities will continue to evolve. Our commitment is to remain attentive to those developments, communicate clearly with clients and prioritise approaches that are capable of standing up to appropriate scrutiny.
Tax advice should ultimately serve the client’s long-term interests. That means looking beyond whether an arrangement appears attractive in isolation and considering whether it is lawful, workable, properly understood and consistent with the requirements of the relevant authority.
For Liberty Rock, that principle informs our approach to tax compliance and payment matters.
If you are a current or prospective client and would like to understand how we approach tax compliance, payment methods or related advisory matters, we invite you to contact Liberty Rock directly for a confidential discussion.