When are employers required to provide security to HMRC?

HMRC’s Securities Series factsheet SS/FS1, Securities in respect of Pay As You Earn and National Insurance Contributions, outlines the circumstances under which HMRC can require employers to provide security to ensure the payment of their PAYE tax deductions and National Insurance contributions (NICs).

These powers are used when there is a serious risk that an employer will fail to pay their PAYE or NICs. There are many reasons for non-payment of tax to HMRC including phoenixism, when businesses evade tax by becoming repeatedly insolvent and then for a new company to be set-up again seeking to defraud HMRC. These measures also target businesses that accumulate significant debts to HMRC.

The required security will usually be paid by electronic payment to a specified HMRC bank account, by cheque, by banker’s draft or by a guarantee in the form of a performance bond authorised and approved by a financial institution.

The amount of security required will be calculated based on:

the amount of PAYE and National Insurance contributions paid or due to be paid by the employer for a 4-month period; plus

an amount equal to any current arrears of PAYE and National Insurance contributions due from the employer.

Businesses required to pay a security deposit can appeal HMRC’s decision.

Our friendly Business and Tax Advisory experts are here to support you every step of the step of the way. Give them a call on 01380 723692 or email us here.