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When it comes to fake news and HMRC, one thing is a definite; HMRC will always strive to close the “tax gap” by identifying practices for evasion. There is often confusion around evasion and avoidance, which in any world involving taxes is a grey area. In my opinion evasion is where tax is due, or regulations exist that people ignore or hide under the radar. This is very different to avoidance, which lets face it, if someone said to you if you do X you will pay more tax than if you do Y; both pieces of advice being legal you are most likely to choose Y! Now I am not a tax expert, I leave that to my capable colleagues within Armstrong Watson; however I do have a great passion for all things payroll and employment related.
It was this passion that led to me taking up the challenge of heading up an already great payroll bureau at Armstrong Watson. I say challenge as I have a huge amount of respect for all my fellow payroll professionals who do a stupendous job ensuring their employers remain compliant, but what about those businesses that are not fortunate enough to have a payroll expert at the helm?
Choosing which software to use, or worse calculating payroll manually can be a daunting task. Keeping up to date with over 260 pieces of legislation that cross over payroll is a daunting task; I know I did it for a living when I worked for the Chartered Institute of Payroll Professionals (CIPP). Deciding whether someone should be put on the payroll or treated as self-employed; get this decision wrong the financial penalties can be huge. Just this month HMRC declared they had received around £819m in uncollected tax due to employment status being incorrect.
IR35 is difficult to understand at the best of times and, even though HMRC do provide an internet tool to help employers decide what someone’s status should be, it can be very difficult when a contractor is saying he/she is self-employed and you believe they are employed. However, some firms take the word of the contractor and fall foul of the legislation. With the GIG economy and all the latest cases going through the courts it is only going to become more complex.
The government is looking at IR35 again with a view of simplifying it and I do hope they are successful, but in my opinion any simplification can lead to burdens, even if just short-term for employers.
So you decide someone is an employee or indeed have employees but no payroll professional, increasing concerns as you try and keep up to date and software needs updating at least once a year; you may have manageable costs, but financial penalties are never manageable nor are they necessary if you are compliant.
So why not consider using a bureau where all this pain can be taken away? The advantages are:
Above are just some of the advantages of outsourcing your payroll, but I can hear you say there must be some disadvantages? Well yes there are, firstly you need to pay for this service, but it will likely be far less than you think and almost definitely less that your existing costs (whether time, systems or future penalties). You do still have all the employer obligations, as a payroll bureau provide a service rather than take away your responsibility. This includes providing the necessary data, complying with the legislation when advised to do so e.g. National Minimum Wage and automatic enrolment. From a General Data Protection Regulations (due to come into force from May 2018) you would be the data controller and the bureau would be the data processor; so consider a bureau than can offer you secure, password protected payslips for your employees and a portal for all your reporting needs!
Choosing a provider shouldn’t be difficult if you determine what you need, what you want and your main objective e.g. cost reduction, time reduction etc. and then set about getting some advice. Any payroll bureau worth its salt will be happy to talk to you about your needs and here at Armstrong Watson, we won’t sell you a service you don’t need or say we can do something we can’t; make sure those you speak to follow the same code of conduct.
If you're looking for a non-sales pressured call to seek help and advice of what your options might be, email our payroll expert Karen Thomson or call her on 07825561028.Contact Karen
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