In this discussion
PAYE deducted from employees’ wages is not ordinary business working capital. In this Notes From The Executive extract, hosted by Mina Amso, Dave Ananth explains why employer deductions need particular attention when a business is under financial pressure. Using those deductions to meet other expenses does not remove the obligation to account for them to Inland Revenue.
Persistent failure to account for employer deductions can expose business owners and directors to serious enforcement and, in appropriate cases, prosecution. Criminal liability depends on the applicable law and the circumstances; the existence of arrears alone should not be presented as a conclusion that a particular person has committed an offence. Inland Revenue and the courts have their own decision-making responsibilities.
The practical lesson is to identify payment difficulties early. Directors should speak with their accountant and lawyer before unpaid PAYE becomes part of a larger pattern of non-compliance. An accurate picture of deductions, amounts paid, outstanding returns and previous IRD correspondence helps those advisers understand what needs attention. A business should not assume that continuing to trade will, by itself, solve an accumulating shortfall.
Dave’s commentary focuses on recognising the seriousness of the position and obtaining appropriate advice. It is not a promise that prosecution can be prevented or that Inland Revenue will accept a payment proposal. Meridian Partners can discuss whether a matter falls within the relevant practice and what the next steps may be. Initial contact should remain brief until conflicts have been checked and a formal engagement is agreed.
Practical points
- Keep employer deductions distinct from available working capital.
- Identify missed PAYE payments and outstanding obligations promptly.
- Involve the accountant and lawyer before a pattern of non-compliance develops.
- Do not assume arrears establish criminal liability or that advice guarantees protection.
Podcast material: Notes From The Executive, hosted by Mina Amso. Featuring Dave Ananth. This material does not imply endorsement by the publisher or host.
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This material is general information only and is not legal or financial advice. Outcomes depend on the facts and the law applying to each matter. Past outcomes do not guarantee future results. Inland Revenue and the courts retain responsibility for their decisions.