From 6 April 2012 HM Revenue & Customs (HMRC) will be able to ask employers to pay a security where there is a serious risk that they won’t pay over their PAYE tax deductions or Class 1 National Insurance contributions (NICs).
This will not affect the vast majority of employers who pay their tax on time and in full. And it won’t be used for employers who are having genuine financial problems, says the HMRC.
The reason given by the HMRC for these increased powers is due to businesses who do not pay being given an unfair advantage. This from the HMRC website
Businesses have repeatedly told HMRC that they resent the unfair advantage gained by those who don’t meet their tax obligations. HMRC is determined to pursue those who won’t pay, to make tax fairer for all.
HMRC can already ask for a security for VAT, insurance premium tax (IPT) and environmental taxes. They are effective – in around half the cases the trader becomes and remains compliant after receiving the first warning letter.
At this point it seems that this is a process which will only be applied to those businesses and business owners who have abused the PAYE system, but we wonder how long it will be before it is required by any small business who wants to employ people.