Finance Bill Tracking Service 2010 | Budget 2010


Who is likely to be affected?

1. Employers that operate Pay As You Earn (PAYE) schemes to account for income tax and National Insurance Contributions (NICs) and have a history of serious non-compliance in terms of paying late or not paying.

General description of the measure

2. Legislation will be introduced in Finance Bill 2010 to allow HM Revenue & Customs (HMRC) to require a financial security from employers where amounts due under PAYE or NICs obligations are seriously at risk. The amount of security will be set by HMRC in the light of the potential tax liability.

3. The detailed arrangements for this security will be set out in regulations. These will provide that HMRC will require a security by notice and set out the right of appeal against the imposition of the security and the amount. There will be a full 12 week consultation on the regulations.

4. The measure introduces a new criminal offence where a person required to give a security fails to do so. If the person is found guilty of the offence they may be fined (up to level 5 of the standard criminal scale (£5,000)).

Operative date

5. The measure will not have effect until regulations are made and the intention is that the operative date will be 6 April 2011.

Current law and proposed revisions

6. There are similar provisions requiring businesses to provide financial security where HMRC believes that VAT revenue is at risk because those running the business do not intend to meet their obligations. There is currently no similar power for HMRC to require a security within PAYE or NICs legislation.

7. Section 684 of the Income Tax (Earnings and Pensions) Act 2003 will be amended to include provisions allowing HMRC to require security in the matters that can be covered in PAYE regulations. It will also set out the new offence of failing to provide security. Similar provisions will be made for NICs through regulations using existing powers.

Further advice

8. The draft regulations will be published for consultation on the HMRC website prior to implementation.

9. HMRC have consulted twice before on the greater use of securities: in June 2007: Payments, Repayments and Debt: the developing programme of work and in November 2008 a further consultation was issued: Payments, Repayments and Debt: The Next Stage.

10. If you have any questions about this change, please send an email to or contact Maria Richards on 020 7147 3223. Information about Budget measures is available on the HM Revenue & Customs website at