PAYE Investigations

This is an area where specialist advice is essential.

When HMRC will investigate

HMRC often consider these as part of the PAYE Investigation or Employer Compliance Review:

  • operation of PAYE and NIC
  • operation of payments to subcontractors under CIS
  • the reporting of Benefits in Kind on forms P11D (especially car and fuel)
  • the employment status of workers
  • the correct treatment of entertainment expenses
  • the operation of IR35
  • termination payments
  • travel expenses
  • vans
  • expats and inpats
  • salary sacrifice.

To the extent that HMRC establish a liability to tax or NIC, the amount owing will also include interest on any late duties and potentially a monetary penalty based on a percentage of the tax and/or NIC due.

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About PAYE Investigations

A PAYE investigation, also known as an Employer Compliance Review, is conducted by HMRC officers who want to ensure that employers and contractors are meeting all of their tax, National Insurance (NIC) and Construction Industry Scheme (CIS) obligations in relation to their employees and subcontractors.

Usually the PAYE investigation is conducted at the employer’s premises, initially to enable a discussion to be held with key personnel within the company and secondly to undertake a review of all the prime records.

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