HM Revenue and Customs (HMRC) has been given the power to tackle employers that try to dodge paying pay-as-you-earn (PAYE) or national insurance contributions (NICs).
From 6 April 2012, HMRC can ask employers to pay a security – a cash deposit or a bond from an approved financial institution – if there is a risk that they will not meet their tax obligations.
The new power will be targeted at employers that deduct money from employees’ pay packets, under the pretext of paying employees’ income tax and NICs, but have no intention of paying it to HMRC.
This will not affect the majority of employers that pay their tax on time and in full, or for employers that have genuine financial problems.
This is an extension of a power that has already been successfully used for VAT, insurance premium tax and environmental taxes.
HMRC will calculate the amount of the security on a case-by-case basis, depending on the amount of tax at risk, the employer’s previous behaviour and other risks.
Organisations that fail to provide a security face a fine of up to £5,000, which will be enforceable by the courts.
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