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Taxman cracks down on employers who deliberately cheat

13 February 2012

Employers with a track record of avoiding PAYE and National Insurance (NI) payments will have to make an upfront security payment from April, under a new scheme unveiled by HM Revenue & Customs (HMRC).

Failure to pay the security will lead to a fine of up to £5,000 as the taxman cracks down on employers who deliberately cheat the HM Revenue & Customs, and their staff, out of employee tax payments.

An HMRC spokesman said they expected to target “360-400” businesses in the first year of operating under the new system.

He stressed that the security system was intended to penalise businesses deliberately avoiding tax payments, particularly ‘phoenix companies’ — those that go insolvent to avoid debts, then reappear under a different name. Firms experiencing genuine difficulties making tax payments were not being targeted.

Security payments are already used to reduce the impact of small firms cheating VAT, insurance premium and environmental tax payments. They require a business or a director to make a cash deposit or hand over a bond from an approved financial institution that is payable on demand. HMRC makes a case-by-case calculation of the amount of the security to be paid, and any fines for non-payment.

If you need any help and advice for your business on Payroll, National Insurance or an Outsourced Accountancy Service, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
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