HM Revenue & Customs (HMRC) is set to benefit from new powers, coming into effect this spring, that focus on tackling employers avoiding PAYE and National Insurance Contributions (NICs).
The change means that from April 2012, HMRC can make employers pay a security in instances where there is a risk they will not pay over NICs or PAYE tax deductions.
The security will either take the form of a cash deposit from the business or a bond from an approved financial institution that is payable on demand.
In each instance, the amount will be calculated on a case-by-case basis depending on the amount of tax at risk and the employer's previous record.
This new initiative has been created to curtail the practice of employers who deduct money from pay packets under the pretext of paying employees' NICs and income tax but have no intention of passing it on to HMRC.
In many instances, employers run up substantial PAYE and NICs debts, while also avoiding contact with HMRC.
These businesses can also move to become insolvent in a bid to avoid paying tax, with a new 'business' set up as a result.
Any business failing to provide a security could face a fine of up to £5,000, which will be made enforceable by the courts.