The Budget contained a measure aimed at tackling employers who have a history of misusing the employment allowance (EA) to avoid paying the correct amount of national insurance contributions (NICs), by requiring employers to pay a bond equivalent to the amount of relief
HMRC says some employers create many small, artificial companies and use these to claim more than the one employment allowance they are eligible for to reduce their employer NICs payments.
This measure will leverage existing legislation to require a bond of £3,000 from the employer each time they set up a new company. If the employer makes an invalid employment allowance claim in future, HMRC will keep the security, protecting revenue.
The bond will be repaid if the employer’s EA claim is found to be legitimate.
HMRC says additional staff will be brought in to administer the new bonds. After initial training and testing in 2018, a full roll out will start from April 2019.
Treasury costings suggest the move will bring in an additional £15m annually in tax receipts from 2019/20.
Report by Pat Sweet
