New HMRC rules to prevent deliberate non-payment of PAYE

Starting from 6 April 2012 HMRC will be able to ask employers to pay a financial security if they think there is a serious risk that the employer will not pay their PAYE tax deductions or National Insurance contributions on time.

This financial security will be determined individually depending on the amount of tax at risk and will be either:

  • A cash deposit from the business or director – held by HMRC or paid into a joint HMRC/taxpayer bank account
  • A bond from an approved financial institution which is payable on demand.

HMRC have stated that this will not affect the vast majority of employers who pay their tax on time and in full and it will not be used for employers who are having genuine financial problems. However, it will put increased pressure on businesses already in difficulty as they will be required to raise additional funds to pay this security.

Failure to provide a security to HMRC will constitute a criminal offence, potentially leading to fines of up to £5,000.

The main target areas for HMRC are those employers who:

  • Deduct money from employees’ pay packets, under the pretext of paying their employees’ income tax and NICs, but have no intention of paying it to HMRC
  • Have a history of building up large PAYE or NIC debt
  • Avoid responding to HMRC’s contact attempts

If you consider your business at risk of receiving a financial security and are experiencing financial difficulties please contact one of our offices or e-mail us at [email protected] for more information on how an appeal can be made.