BUSINESSES which have had problems paying PAYE and National Insurance Contributions’ (NICs) in the past, will now be required to provide security to HMRC in the form of a cash deposit. 

The new powers which have been granted as part of last year’s Finance Act come into effect this spring and will force any employers to provide a cash deposit, if it is deemed that they pose a serious risk of non-payment of PAYE and NIC’s. 

Nigel Westman Partner at Yorkshire based chartered accountants Clough & Company, says: “HMRC hasn’t indicated exactly how the deposit will be calculated as yet, but if the scheme works in a similar manner to VAT securities the deposit will probably reflect a multiple of several months anticipated PAYE and NIC deductions which can obviously be a significant amount of money for a business to find upfront.” 

A MAJOR new campaign has been launched to catch tax dodgers working in the motor trade, operating market stalls, e-traders, those selling clothing and individuals working in building related trades according to a warning from Yorkshire accountancy firm Clough & Company.

The HMRC clampdown is part of a wider challenge to raise an additional £7bn each year by 2014-15 by reducing tax evasion, avoidance and fraud and follows Chancellor George Osborne earmarking £900m to tackle the problem.  

Nigel Westman, Partner of Clough & Company, explains: “HMRC is now making major in-roads into catching tax cheats and this latest campaign highlights specific sectors where the organisation believes there is strong evidence of tax evasion which is likely to put thousands of businesses and individuals under the spotlight.  

“HMRC is also using new technology to trace both individuals and businesses and obtain information about their income.  In addition, they will cross-reference previous tax returns with other information they hold to identify irregularities which means they’re better equipped than ever to identify those avoiding paying the correct tax.”

Nigel adds: “Punishments could include financial penalties, criminal prosecution, seizure of personal assets or even prison. Criminal prosecutions can be expensive and time-consuming for those involved and investigators will often contact employees, suppliers and customers which can be extremely damaging to a business's reputation.

“In these austere times, the drive on tax compliance will certainly continue and as technology improves those cheating the system will find it increasingly difficult to remain in the shadows.  However, those coming forward voluntarily can generally expect a more lenient response from HMRC so this is an advisable option for anyone that wants to put their tax affairs in order.”

For further information visit www.hmrc.gov.uk or for details about Clough & Company and its services visit www.clough.co.uk