In recent years, due to the ever-increasing complexity of legislation affecting employers, there has been a significant increase in employer compliance visits by HMRC. This has resulted in a corresponding rise in penalties charged for non-compliance as companies fail to keep up with the changes; payroll now includes much more than the deduction and paying over of tax and national insurance.
Recent changes to legislation affecting employers have included, but are not limited to, the deduction of student loans, the EC Working Time Directive and consideration of National Minimum Wage (NMW) and National Living Wage (NLW). In recent months, it has become evident that HMRC are targeting employers who are using off payroll workers including the issue of ‘one to many’ letters which question the status of workers.
HMRC doesn’t discriminate. Any of your clients, no matter what the size of the business, could find themselves subject to scrutiny and face the stress and anxiety of dealing with a visit from HMRC. The first notification your client will have of this will be a letter headed ‘Check of Employer Records’.
Being aware of what a PAYE compliance visit can involve and what your client business needs to do in order to prepare for the visit is essential. It may well be that your client has no previous experience of an HMRC compliance visit, and as such they may incorrectly assume that HMRC’s focus will solely be on the payroll function. This is not the case.
A check of employer records can cover (but is not limited to) other areas such as:
- benefits in kind such as cars, vans, fuel, accommodation, medical benefits
- payment of expenses such as travel and subsistence, entertainment, staff welfare
- termination payments
- status of workers
- NMW/NLW
- salary sacrifice/incentive schemes
- overseas workers/staff relocations
- CIS (Construction Industry Scheme)
- beneficial loans/directors loan accounts
It should be noted that, even though HMRC will be aware that you are authorised to act in respect of the business in an accounting capacity, their systems may not have a record of any authority to act in relation to PAYE matters. As a result, you may well find that you do not receive a copy of the notification relating to any impending review. Indeed, we often find that clients do not notify their accountants in the mistaken belief that they can handle a PAYE review on their own, precisely for the reasons already stated. A reminder to all clients to contact you on receipt of a letter from HMRC, should they find themselves under review, would benefit both you and the client.
We specialise in assisting businesses that either wish to proactively consider having their payroll/benefits systems reviewed to highlight any areas of weakness and to provide suggestions for improvement as well as supporting those clients that are already under review by HMRC. We have a proven track record of successfully resolving disputes and have built up a wealth of experience in this specialist area.
Jacqueline Mann and Nigel Nordone are experienced tax professionals as well as being ex-HMRC inspectors. Both specialise in PAYE and status matters and as such, they are uniquely placed to assist you and your clients with a view to minimising risk and supplying peace of mind.
For further information on how to protect your clients or how we can assist you with issues surrounding tax status and compliance visits, contact
Nigel Nordone or
Jacqueline Mann on 0345 223 2727.