Powers to tackle PAYE dodgers come into force

HMRC will soon be able to require employers to pay a security where there is serious risk that they won’t pay their PAYE tax deductions or NICs.

The powers will come into force from April and are an extension of an initiative that has already been successfully used for VAT, insurance premium tax and environmental taxes.

Failure to pay the security will be punishable with a fine of up to £5,000, enforced through the courts.

HMRC will target employers who deduct money from employees’ pay packets, under the pretext of paying their income tax and NICs, but have no intention of paying it to HMRC.

It will not affect employers who have genuine payment difficulties.

Continued...

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Comments
carnmores's picture

are these really necessary

carnmores | | Permalink

in the world of realtime information ? also all it is an attempt to reinstate crown prefernece thro the back door - if used at all it must be used with great care

YES carnmores. 4 the "change the name, the game's the same" ...    1 thanks

dstickl | | Permalink

YES - in my opinion - carnmores. for the "change the name, the game's the same" guys who repeatably leave workers in deep trouble.

frustratedwithhmrc's picture

We've seen this stunt before...    2 thanks

frustratedwithhmrc | | Permalink

I agree that if this is limited to Phoenix companies and their directors or those directors whose companies are struck off with significant PAYE, VAT, NIC's outstanding then it is appropriate.

My concern with this sort of thing is that it is often catches those who were simply unlucky or unfortunate and can be a barrier to them re-establishing a viable business. My other concern is that once HMRC establishes a precedent for claiming tax in advance (regardless of the specific need), this often expands until it covers pretty much everybody. There is a rightful concern that this is effectively reintroducing HMRC as a preferred creditor through the back door.

Provided that the barriers to this remain high (specifically a substantial amount lost once or having had a company struck off twice with outstanding PAYE, VAT, NIC's due) then I don't have too much of a problem with this approach.

The balance to be found is in HMRC protecting tax revenues which are due but not paid, but also not creating additional barriers to the creation of new businesses, which is where we get the majority of our growth from.

We need a dynamic business environment where people pay their taxes.

alan.rolfe's picture

Football clubs    3 thanks

alan.rolfe | | Permalink

It will be interesting to see if this is used against football clubs, as HMRC have clearly taken issue with the way the football leagues ensure that football debts are paid before other creditors, often leaving PAYE unpaid when financial problems arise.

frustratedwithhmrc's picture

On the issue of Football Clubs

frustratedwithhmrc | | Permalink

alan.rolfe wrote:

It will be interesting to see if this is used against football clubs, as HMRC have clearly taken issue with the way the football leagues ensure that football debts are paid before other creditors, often leaving PAYE unpaid when financial problems arise.

Given the tussle in the High Court at the end of last year, I would have thought that football clubs would be singled out for this as almost the first to be required to pay bonds.

Equally, given the very different positions of both sides I suspect that this will end up going back to court.

http://www.accountingweb.co.uk/article/football-league-v-hmrc/521786

 

carnmores's picture

well its on the HMRC football hit list    2 thanks

carnmores | | Permalink

ie the demotion of non footballing creditors to the bottom of the queue i would hold that paye on players wages is a footballing creditor - also the horny old question of offshore held image rights held by companies not held by the player who is then lent large sums by the company and quasi dodgy EBT - how much money do these people need or deserve - maybe we should legislate that a percentage of earnings for short career situations should be pit into a pension pot

Am I reading this right ?

The Black Knight | | Permalink

If you don't pay £100K of PAYE and can't get security then you will be fined £5K that perhaps you won't pay either.

The Vat version puts you out of business making it a criminal offence to issue the next invoice.

johnjenkins's picture

I don't see why consistency

johnjenkins | | Permalink

can't apply to PAYE. After all penalties are now consistent across the range of taxes. The VAT version works very well. Although the "masters" of Phoenixing will soon find a way round. So again it won't be the naughty thta gets hit, just the unlucky.