The bid bond prequalifies the principal and provides the necessary security to the owner (or general contractor), also known as the “obligee”.
In the United Kingdom, bid bonds are commonly used in various industries such as construction, supply, and service contracts.
HMRC bonds are required for businesses operating in industries regulated by the HM Revenue and Customs Department.
These bonds act as a guarantee for the payment of taxes and duties,[2] ensuring that the business complies with the necessary regulations.
The bond amount is typically based on the potential tax liability of the business, which may vary depending on the specific industry and type of goods being dealt with.