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HMRC have been imbued with a new power to tackle businesses that are highly likely to evade their employment tax obligations. And the taxman is to launch a campaign against failure by high-earners to submit returns.
From April, the Revenue will be able to demand a security payment of up to £5,000 from a firm if the department believes there is a serious risk of deliberate non-payment of PAYE deductions or National Insurance contributions.
The latest power – an extension of one already used to combat the dodging of VAT, insurance premium tax and environmental taxes – is intended to tackle employers who deduct money from pay packets under the pretext of paying employees’ income tax and NICs but with no intention of forwarding it to HMRC.
Such businesses often build up substantial debts while ignoring the Revenue’s attempts to contact them, said the department. In many cases, the firms becomes insolvent, to avoid tax, and then set up in a new form soon after to continue trading (as a ‘phoenix company’).
The amount of required security will be calculated on a case-by-case basis and will be enforceable by the courts. In most cases, it will be either a cash deposit from the business or director, or a bond from an approved financial institution that is payable on demand.
In a further move to combat tax evasion, a new campaign focusing on missing returns from taxpayers liable to pay at the highest rates is scheduled to begin later this year.
It will be followed by two more drives: the first will target the several 100,000 tradespeople who work in the home improvement market, while the second will concentrate on individuals who receive income from buying and selling goods direct to others, or earn a commission from such sales.
As with similar initiatives – such as the impending electricians’ tax safe plan – parties will be invited to come forward to put their affairs in order under the promise of limited penalties.
Details are yet to be released. Marian Wilson of HMRC’s risk and intelligence, division said only that the department will use ‘new technology… to analyse returns… covering a range of taxes and to cross-reference these with other information to build a picture of where we believe we have taxpayers with missing returns’.
‘We will use the same technology to analyse information gathered to support the following two campaigns,’ she added.
