Treasury pushes ahead with 'security' against NICs and PAYE

PROPOSALS that would allow HMRC to demand security from employers against PAYE and national insurance payments have been published in the Finance Bill 2011, out today.

HMRC estimates the exchequer lost up to £800m in 2008-2009 through employers who went bust without handing over PAYE and NICs deducted from workers’ salaries.

The government is also proposing to make failure to comply with a demand for security a criminal offence.

The consultation document said: “HMRC estimates that the Exchequer lost between £600 million to £800 million per year between 2005-06 and 2008-09 in PAYE and NICs debts that had been built up by employers who then became insolvent. This is money that had been deducted from employees’ pay, but was not paid to HMRC.”

The consultation document immediately attracted pleas that the new powers only be used sparingly.

PwC partner Simon Wilks said: “The announcement relating to security for PAYE and National Insurance Contributions mirrors the measure already in place for VAT. We would hope that because of the criminal nature of the power, it will be used infrequently and only in appropriate circumstances.”

Security against PAYE and NICs payments was proposed in Alistair Darling’s last Budget as chancellor in March this year.

Consultation on the draft powers will run until February 2011.

This is the firt time a Finance Bill has been published in draft form for consultation at least three months of when it is due to go through Parliament.

HMRC is also seeking powers to gather data in large quantities.