An Employer Compliance Review or PAYE Investigation is something that all employer’s need to be aware of. They can be very time consuming to a business and very costly. They are costly in the sense that if HMRC find something wrong, the additional tax and National Insurance, not to mention interest and penalties, on average brings in approximately £10,000 to the Chancellor of the Exchequer! Ouch!
HMRC will rarely carry out a truly random review and most are triggered by an event or reason. Having said that, HMRC are very unlikely to disclose the purpose of their visit at the outset. It could be an error on a Form P35, an apparent omission from a Form P11D, a review of the business accounts or the owner’s personal tax returns or other third party information obtained by HMRC.
Many businesses believe that their payroll looks after itself, if the net pay is correct so is everything else and completely under estimate the scale and scope of an Employer Compliance Review. Typically, a review will cover areas such as:
- Payroll and the operation of PAYE and National Insurance;
- Expenses and reimbursement procedures including mileage records;
- Statutory payments (e.g. sick pay, paternity and maternity pay);
- One-off issues (e.g. redundancy or termination payments);
- Benefits in Kind and non-cash remuneration;
- Construction Industry Scheme if applicable;
- Employment Status (‘self-employed’ or ’employed’);
- IR35 issues;
- National Minimum Wage compliance.
If you are in any doubt that your systems and procedures would not stand up to an HMRC review, please contact Tyrrell & Company. We have the expertise and experience to help you and will carry out a dummy review before HMRC come knocking on your door. It’s better to be safe than sorry, isn’t it?