Taxman tackling PAYE dodgers

It is commonknowledge that employees pay tax and national insurance under the PAYE system.

Employers deduct this money from workers pay packets and then pay over the tax and national insurance contributions (NICS) to HM Revenue and Customs on a regular basis.

Unfortunately, not all employers pay their tax on time and in full.

These non-compliant businesses gain an unfair advantage over those that meet their tax obligations, so newpowers have been introduced to deal with defaulters. Hmrccannow ask employers to pay a security where there is a serious risk they won’t pay their PAYE tax deductions or NICS.

It won’t affect the majority of employers who pay their taxontimeand it won’t be used where there are genuine financial problems.

The security will usually be payable by the business either as a cash deposit or as a bond from an approved financial institution which is payable on demand.

Employers who deliberately choose not to pay, evade tax by becoming insolvent and then set up a newcompany to carry on the business, build up large PAYE debts or simply ignore HMRC correspondence will all be targeted by HMRC.

If the employer fails to provide the security, HMRC can prosecute and this may lead to a fine of up to £5,000.

It will also continue to pursue any debt in the normal way. These new powers also apply to VAT, landfill tax, insurance premium tax, aggregates l e vy and climate-change levy.

Andy Bain is a senior tax manager at Acumen Accountants and Advisors

Andy Bain