How to Survive a PAYE Audit

Complimentary Webinar Slides:

How to Survive a PAYE Audit

7 January 2014

Nigel Gorski

w: www.thebusinessspringboard.co.ukt: 0113 2089922

Business Savvy, Training Know How

About Your PresenterNigel is a fully qualified chartered accountant with considerable people management and training experience. He has not only worked in industry and for one of the ‘big 4’ accountancy firms but now runs his own accountancy practice. Nigel has considerable business mentoring experience and delivers the following modules for The Business Springboard:The 4D Manager – 2.5 DaysFinance for operational managers – 1 dayManaging Peformance – 1 dayDelivering exceptional customer service– 1 dayBusiness mentoring packages



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These materials are designed solely for the use of participants on our courses. These materials shall not be copied or reproduced in any format whatsoever without the prior consent of The Business Springboard Limited.The content of these materials does not constitute advice tailored to any participant’s specific needs and to the maximum extent permitted by applicable law, The Business Springboard or any of its employees or associates shall not be held liable for any direct, indirect or consequential loss or damage arising as a result of use of these materials.



Welcome

Introduction to HMRC Enquiries How you could be selected for a PAYE audit Payroll checks ‘Employing’ freelancers Employee expense payments At the end of the Review Questions & Answers



Introduction to HMRC Employer Compliance Reviews

The UK tax system is based around self assessment

In practice this usually means a combination of professional advice and good software!

HMRC select businesses for inspection in a number of ways

You will generally get notice of the meeting The letter will explain what the inspector wants

to see HMRC will also let you know how long the visit

will take You can ask for a change of date if someone is

on holiday You will meet HMRC at your business premises



How HMRC Select EnquiriesThere are a number of ways in which an ‘Employer Compliance Review could happen: Purely random – believe it or not! A risk trigger from previous year information or

industry type Lots of RTI errors and rejections Erroneous P11Ds Late returns It could be a general compliance review or an

‘aspect enquiry’



The Visit: Payroll Checks

The inspector will want to see: See payroll, bank and cash records Check some calculations including statutory

payments Make sure tax codes are being applied Industry specifics like tips or loans might be

covered Make sure the new RTI ‘on or before rule’ is

being applied (small business exemption applies)

Potentially look at minimum wage Financial information supporting P11Ds, for

example a common area for errors is car values not being correct



‘Employing’ Freelancers

Care needs to be taken in this area It’s a big earner for HMRC Employing people who ‘pay their own tax’

instead of employees is generally not a good idea although it might in the short term save a bit of employers NI

You can verify their status using the employment status indicator

If they should be employed then you must take action

This does not apply to consultants working through their own service companies



Expenses

The inspector may want to see a sample of expense forms

Mileage is always a good earner for HMRC as there are frequent challenges on whether a journey is a business journey

Similarly mobile phones and home working Make sure you have properly documented

mileage logs Ensure that expense payments are in line with

your dispensation or settlement agreement Watch our for entertaining and the annual limit Similarly gifts need to be ‘trivial’



At The End of the Review

The inspector will provide a summary of findings and any information they require

A full written report will be issued afterwards The report can be disagreed with and can

sometimes ask for further clarification There may be additional tax with a penalty

and interest Any payments to employees are generally

treated as net payments and the assessment is grossed up

Penalties vary depending on whether they are accidental (upto 30% of the tax) or deliberate (upto 100% of the tax) and whether you’ve been ‘helpful’

There is always a right of appeal Don’t forget reasonable care!



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How to Survive a PAYE Audit

Economy & Finance

Transcript of How to Survive a PAYE Audit