Treasury is aiming to crack down on employers who take income tax deductions from their workers and don’t pass them on to government.

At present this is only a civil offence.

But under the Income Tax Legislation (Amendment) Bill, which was given its first reading in the House of Keys last week, companies which continue withholding payment could face additional civil penalties and ultimately a criminal penalty in the form of a fine up to £10,000.

And directors could be held personally liable for some of the outstanding amount if it is held that they knew or should have known that the ITIP was not being passed on.

The process mirrors that which applies to National Insurance payments.

Under existing regulations, if an employer fails to pay the monthly tax deductions it has made from its employees within 14 days it is liable to pay a civil penalty. Under the new regulation, if it fails to pay within three months, it will be liable to a further civil penalty and if it has still failed to pay after three months, it could be fined up to £10,000.