New powers to tackle employers who try to dodge paying their employees' PAYE (Pay As You Earn) tax or National Insurance Contributions (NICs) are to be given to HM Revenue and Customs. The powers will be coming into effect on 6 April.

HMRC will be entitled to demand that employers give a security when they are considered at risk of deliberately not paying staff's PAYE deductions or NICs. The security will be calculated individually according to a number of factors, including the amount of tax at risk and the employer's history of tax payment. It may be a cash deposit or a bond from a reputable financial institution, payable on demand. If employers fail to pay the security, they may be fined up to £5,000.

The move will not affect companies going through real payment difficulties but will only be applied in cases where there is evidence that employers deduct certain sums from their employees' salary, claiming that they are paying income tax, but for some reason the money has not reached HMRC.

This follows the already implemented powers for HMRC to ask for a security for VAT, insurance premium tax and environmental taxes.

HMRC claims that most UK businesses pay everything they owe on time and in full and those few who wish to make profit at the expense of the taxpayer will be forced to comply with the rules or pay a fine.

E advice@hwfisher.co.uk