From 6 April 2012 HM Revenue & Customs (HMRC) will be able to ask employers to pay a security where there is 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.

HMRC will use securities to tackle the handful of employers who deliberately try to defraud the government.

These employers:

• Deliberately choose not to pay
• Engage in phoenixism – this is where a business evades tax by becoming insolvent and then sets up a new company the next day to continue trading
• Have no qualms about building up large PAYE or NICs debts, including penalties
• Do not respond to HMRC’s attempts to contact them

The required security will usually be either a cash deposit from the business or director – held by HMRC or paid into a joint HMRC/taxpayer bank account.