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Does My Business Need A PAYE Health Check?

Whether you are the owner of a small business or a brand new start up; as an employer you may become subject to a PAYE compliance visit. Businesses of all sizes and industries may receive a letter from HMRC informing them (often with at most only 7 days notice) that they will be receiving a PAYE compliance visit which will aim to determine whether a company is successfully recording all employee charges, the correct forms are being filed and the appropriate tax is being paid.

Knowing what a PAYE compliance visit can involve and what your business must do in order to be prepared is essential. Those businesses that have failed to comply with the correct reporting procedures and have failed to pay the correct sum of tax will be expected to settle their underpayments and may even face punishment.

As an employer, if you have previously never before received a PAYE compliance visit you may understandably assume that the focus will only be on payroll recording procedures, that all wages are correctly processed for tax and national insurance payments and details are regularly provided to HM Revenue and Customs. Although these points will be considered within your check, HMRC will want to ensure that all other employee benefits have also been sufficiently recorded.

A PAYE compliance visit will look at whether the correct recording procedures have been conducted for and tax has been paid on:

  • Company cars
  • Company laptops/mobile phones or any other electronic devices
  • Cash reimbursements
  • Travel expenses
  • Medical insurance
  • Incentive schemes

The above are employee benefits that must all be recorded within your payroll system via the P11D forms. For small business owners and start ups new to this, it can be relatively easy to make errors or fail to include important details. For those who have decided to conduct their payroll in-house, knowing what needs to be done and how, without specialist advice, can be an extremely difficult task.

As a result, small business and start up business accountants specialise in providing PAYE health checks.

An official PAYE health check may involve the following...

  • Checking for any errors on official records
  • Comparing PAYE to accounts in order to identify whether anything has been missed out
  • Reviewing all tax deductions, sick pay and so forth
  • Allowing a business to make any amendments and discuss options with HMRC to avoid any drastic repayment charges.

The above points ensure that, in the event of a compliance visit, any potential risks and hassles can be minimised.

Whether you have received a letter from HMRC or not, keeping your PAYE records in the best state possible is crucial to ensuring that your finances remain strong; ultimately an essential part of your long term growth and success. Why not speak to a specialist accountant to find out more? 

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