From 6 April 2012 H M Revenue & Customs will be able to ask employers to pay a security where there is a serious risk that they will not pay over their PAYE tax deductions or class 1 national insurance. This is an extension of a power that has already been in use for VAT, insurance premium tax and environmental taxes and is aimed at employers who:
• deliberately choose not to pay;
• engaged in Phoenix companies;
• have no qualms about building up large PAYE or national insurance debts including penalties and
• do not respond to HMRC’s attempts to contact them
The required security will usually be either a cash deposit from business or a director which will be held by HMRC and paid into a joint HMRC/taxpayer bank account, or a bond from an approved financial institution that is payable on demand.
Businesses that fail to provide a security face a fine of up to £5,000.