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Employment tax investigations

This is an area where specialist advice is essential.

When HMRC will investigate

HMRC often consider investigating as part of a Know Your Customer (KYC), Senior Accounting Officer (SAO) reporting, part of a wider tax Business Risk Review (BRR) or an Employer Compliance Review (formerly known as a PAYE investigation):

  • operation of PAYE and NIC
  • Coronavirus Job Retention Scheme (CJRS)
  • operation of payments to subcontractors under CIS
  • the reporting of Benefits in Kind and PAYE Settlement
    Agreements (PSA)
  • the employment or self-employment status of workers
  • intermediary reporting
  • the correct treatment of entertainment expenses
  • the operation of IR35
  • travel and subsistence expenses
  • termination payments 
  • company cars and vans
  • expats and in-pats
  • Short-term Business Reporting (SBTV)
  • salary sacrifice and Optional Remuneration (OpRA) arrangements
  • share arrangements and reporting
  • salary disguised as something else such as loans.

We can undertake a pre-emptive review of your organisation to determine areas of risk where additional tax or NIC may be due, and can advise on ways to reduce the risk of non-compliance.

Where a review is conducted by HMRC officers they will want to ensure that employers and contractors are meeting all of their tax, NIC and CIS obligations in relation to their employees and subcontractors. HMRC may start by issuing an initial questionnaire before starting a full review in order to determine the organisations overall risk rating. Usually HMRC prefers the review is conducted at the employer’s premises, initially to enable a discussion to be held with key personnel to establish the processes and procedures in place to manage the organisations risks and then to undertake a review of all the prime records.

Care and advice should be taken on answers to any questions from HMRC and to what records HMRC is entitled to see and who, if anyone, should attend any meeting with HMRC.

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