News
New Powers for HMRC to Tackle Employers Who Dodge PAYE and NIC Payments
07 - 02 - 2012
From 6 April 2012 employers can be asked to pay a security where there is serious risk that they won’t pay over their PAYE tax deductions or Class 1 National Insurance contributions (NICs).
HMRC will use securities to tackle the handful of employers who:
• deliberately choose not to pay
• evade tax by becoming insolvent and then immediately set up a new company to continue trading (known as phoenixism)
• build up large PAYE or NICs debts, including penalties
• do not respond to HMRC’s attempts to contact them
• evade tax by becoming insolvent and then immediately set up a new company to continue trading (known as phoenixism)
• build up large PAYE or NICs debts, including penalties
• do not respond to HMRC’s attempts to contact them
These employers will have deducted this money from employees’ pay packets under the pretext of paying their employees’ income tax and NICs to HMRC.
The required security will usually be either a cash deposit from the business or director, or a bond from an approved financial institution which is payable on demand.
HMRC will calculate the amount of the security on a case by case basis - depending on factors such as the amount of tax at risk and the previous behaviour of the employer.
If an employer fails to provide the security for PAYE or NICs, HMRC can prosecute them. The sanction is a fine of up to £5,000. Those being required to pay a security can appeal against this decision.
HMRC can already ask for a security for VAT, insurance premium tax (IPT) and environmental taxes.
This will not be used for employers who are having genuine financial problems, who should contact HMRC to discuss their individual circumstances.
It will also not affect the vast majority of employers who pay their tax on time and in full.
