Employer Compliance Visits – Minimize the Risk

HM Revenue & Customs (HMRC) always seek to concentrate effort in areas where it considers tax is being lost. It has therefore increased the nature and scope of compliance visits in recent years. At McDade Roberts we help ensure our clients are meeting all HMRC requirements so read on to find out more about minimizing the risk of employer compliance visits.

What Is The Purpose Of A HMRC Compliance Visit?

The purpose of compliance visits is to confirm that PAYE has been properly operated on all earnings and payments in accordance with the rules and regulations operational, as set out in the booklet, Employer's Further Guide to PAYE and NICs (CWG2).

HMRC's visit will be to your business premises and is likely to check:

  • PAYE deduction working sheets for completeness and accuracy
  • Correct use of employee codes
  • Reconciliation of the records with the Final FPS (Full Payment Submission) and/or EPS (Employer Payment Summary) for the tax year
  • Correct treatment of new employees and leavers
  • Cash payments where PAYE has not been operated
  • Expense payments, employee benefits, and their correct disclosure on forms P11D
  • Compliance with terms of any dispensation
  • Compliance with sub-contractors' rules
  • Compliance with NIC regulations

Compliance Problems

The following are the main areas where problems may arise:

  • Gross payments to casual employees
  • Payments to alleged 'self employed' persons
  • Lump sum expenses
  • Private petrol
  • Spouse's travel and subsistence
  • Travel to work from home and vice versa
  • Trips for purposes other than purely business, e.g. trade fairs, golf, social outings
  • Home telephone
  • Entertaining
  • Expenses for use of home as an office
  • Club subscriptions
  • Goods and services provided free or below market value
  • Luncheon expenses
  • Clothing
  • Accommodation
  • Work undertaken at an employee's home
  • Medical expenses

Settlement

The majority of compliance visits result in some discrepancies being uncovered, and HMRC will usually calculate the 'lost' tax and NI over a period of six years plus the current year. This period may be extended if they suspect that deductions have been withheld deliberately. HMRC may also seek penalties, although these will normally depend on the gravity of the discrepancy and the existence or absence of 'reasonable care'.

How Can McDade Roberts Help?

McDade Roberts can assist in reviewing your wage and salary records with a view to identifying possible areas of non-compliance with PAYE and NI regulations. If a visit is made we can advise on, and assist in, negotiating a settlement with HMRC and we also offer an insurance service against any cost. Call us on 01772 717110 to find our more.