Is it time to review your Employer Records?

An Employer Compliance Review or PAYE investigation (‘a review’) can be launched by HMRC at any time. Sometimes these checks are targeted because HMRC suspect there is an issue with an employer, or they are targeting a specific industry. On other occasions the check is completely random. Whatever the reason for the check, the directors will have peace of mind if they are confident that they are in compliance with employment related legislation.

The review can look at the operation of PAYE and calculation of salaries, tax and national insurance deductions. It can also look at student loan deductions, statutory maternity, paternity and sick pay and minimum wage regulations. HMRC often pay particular attention to the status of workers (especially those that are not employees), benefits in kind, expenses and termination payments.

Armstrong Watson can carry out a PAYE review to give you the peace of mind that you are correctly complying with the legal obligations of an employer and highlight any risks or errors. We will also advise on correcting and minimising any risks and errors found. We can also assist with the implementation of any changes to your policies or systems that are required following an Employer compliance Review from HMRC. The PAYE review can also be used to spot opportunities to make changes to the packages offered to your employees. We can also provide advice in advance of a transaction, such as a termination payment or long service award to ensure it is tax efficient and meets the relevant legal requirements.

Recently our team carried out a PAYE review for a client in advance of an Employer Compliance Review from HM Revenue & Customs. We highlighted a number of risk areas including one specific for that particular industry based on our previous experience. HM Revenue & Customs did pick up on the area we identified, but our client was prepared because of the work done by Armstrong Watson.

The rules covering these areas are complex and some have changed recently so please refer to Karen Thomson’s article Salary sacrifice conundrum ends for more up-to date changes.

We can perform a PAYE review to ensure that your current practices are in line with legislation and highlight any risk areas for your business, and also provide you with advice on the most tax efficient remuneration packages for directors and employees to help incentivise, retain and reward your team.

Article written by Sam Pooley, Tax Senior