Tax investigations are called many things and come in many guises; a PAYE audit or check is simply another one.

The purpose of the audit is to ensure that an employer is complying with all his obligations under the PAYE regulations and will include a review of:

• The operation of PAYE
• National Insurance Contributions
• Benefits in Kind
• Any payments, loans or assets made available to directors
• Status (categorisation of workers as employed or self employed)

For any employer a small adjustment for workers can be multiplied many times over for each employee and then for several tax years, add in interest and penalties and the end result can be quite devastating.  There are options to enter into a global PAYE Settlement Agreement (PSA) but the bottom line can remain a significant challenge and risk for any business.

The usual areas that may cause difficulties can include; the general operation of PAYE, benefits in kind, payments to casuals (P46 procedures), round sum allowances, travel costs, business entertaining, subsistence, provision of motor vehicles and fuel, IR35 issues, incentive or bonus schemes, loans, payments to directors, assets used by directors, late or incorrect returns and payments.

Another associated area covered by such Audits may include the correct operation of the CIS (Construction Industry Scheme) for those deemed contractors or subcontractors.  This area can mask its own pitfalls and difficulties.

As part of a review auditors may review the employer’s adherence to the National Minimum Wage regulations which is also ‘policed’ by HMRC.

Anything to do with the above can be complex, technically difficult and a great financial risk to any employer.  PAYE auditors are experts in their field of operation; engaging the assistance of a specialist to assist you will ensure HMRC deal with matters correctly and possibly save you large sums of money.