PAYE Health-checks and reviews – call now for free initial consultation…

An overview

HM Revenue & Customs PAYE reviews are increasingly focusing on particular expenses paid or reimbursed to employees with their reviews concentrating on key areas where they suspect income tax and National Insurance “misdemeanours” are most likely. Our experience is that the reviews are more technical than we have perhaps seen in the past. As a consequence if these are not managed correctly, or indeed if the affairs of the business are not generally in order then areas of weakness can be quickly uncovered.

What are the key risk areas?

Our experience over the last year or so is that HMRC PAYE audits are tending to focus in key areas. Whilst we cannot be prescriptive some of the areas of particular HMRC interest at present are as follows:

• The distinctions between business entertaining, staff entertaining and subsistence and in particular the way in which employers gather information from their employees through its expense procedures to ensure the categorisation (and therefore the tax treatment applied) is correct.

• The basis on which consultants are engaged. Where these are treated as self-employed should they be more properly treated as employees and what systems does the business have in place to adequately review and identify whether PAYE should be applied?

• Mileage payments to employees. Are sufficient procedures in place to allow the employer to identify the extent to which such payments may be demonstrated to be in respect of qualifying business journeys? This is commonly reviewed where businesses are multi-sited or send employees to what they consider are a series of temporary workplaces.

• The tax treatment of payments to departing employees.

• The provision of cars, vans and other assets to employees.

A Solution…….

Whilst never possible to eliminate the risk of an HMRC review resulting in arrears of PAYE, income tax and NICs being sought, our experience is that it is possible to significantly reduce potential cost exposures by conducting a PAYE health check. We are very experienced in running these reviews, identifying key risk areas and suggesting appropriate remedial action. We do this by conducting interviews with appropriate personnel, review of expense claims and other relevant paperwork. This allows us to suggest appropriate amendments to systems, and policies. As a consequence of this we will commonly suggest amendments to existing Dispensation and PSA arrangements. This should go someway to reducing your risk profile with HMRC, and therefore your risk of review.