PAYE Inspection

What can HMRC look at and into in a PAYE inspection

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Client has a PAYE inspection and I wonder what HMRC can ask for. Directors Loan Accounts seem fair enough, what about in to all other nominal accounts? is that OK.

There is also a consultancy invoice from a company owned by one of the directors. Can they ask for a copy of the invoice?

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By tom123
06th Dec 2016 16:36

I would have thought the principal information would be contained in your payroll records (eg Sage Payroll printouts, payslips etc) and wouldn't really envisage needing to show anything from your accounting nominal ledger.

I don't recall doing that here when I last had one.

Did they send a letter etc - they normally give an indication.

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By Wanderer
06th Dec 2016 16:49

I find the opposite.

PAYE inspectors seem pretty disinterested in payroll records & are much more interested in DLA, looking at invoices, expenses, BIKs etc. etc.

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Replying to Wanderer:
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By Accountant A
06th Dec 2016 16:51

Wanderer wrote:

I find the opposite.

PAYE inspectors seem pretty disinterested in payroll records & are much more interested in DLA, looking at invoices, expenses, BIKs etc. etc.

I posted at the same time. Agree with you. Payroll records 'ought' to be spotless but it's what hasn't been dealt with through payroll, etc., that could be problematic.

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By Accountant A
06th Dec 2016 16:49

I would have thought that looking at various nominals might be of interest as it might reveal payments being made that have been incorrectly treated for PAYE purposes.

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By Manchester_man
06th Dec 2016 17:37

P11D's, cars / vans / fuel, expenses procedure, as well as the usual run of the mill payroll records.

As stated above, it's not just checking that the payroll is operated correctly with no errors, but also looking for things that should have been payrolled / BIK'd.

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By tom123
06th Dec 2016 21:01

Maybe (and meaning no disrespect anywhere), as I have tended to work for larger firms (ie 200 staff or so) the payroll has been where it's at - and there have been no other types of remuneration.

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Replying to tom123:
RLI
By lionofludesch
07th Dec 2016 10:10

Doesn't mean they can't look for it, Tom.

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Replying to lionofludesch:
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By tom123
07th Dec 2016 10:23

Yes, I get that - must just have been that I have tended to work at places where they didn't consider this to be an area that could be relevant - I suppose.

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By DMGbus
07th Dec 2016 08:43

Here are the areas that I would expect an HMRC officer to look at during a PAYE inspection:

1. Look at petty cash records (hoping to find the cleaner's wages or other casual labour not reported under RTI)

2. Review the employment status issue of payments made to individuals other than under PAYE

3. Check that any "expenses" payments made are either reported on P11D or not reportable (eg. correct mileage rates, PIEs, etc.)

4. Maybe National Minimum Wage review (I believe that HMRC enforce this)

5. Check that bonuses and commission have been taxed under PAYE

6. Check that Employment Intermediary reporting requirements have been complied with (if applicable)

7. Check Employment Allowance qualification

8. Review compliance with operation of statutory payments (eg. SSP and SMP)

9. Look for any one-off or unusual payments to current and former employees, eg. termination payments

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Replying to DMGbus:
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By robert
07th Dec 2016 09:21

The last one I had (a few years ago now) told us he was now expected to ask questions on any HMRC areas and he had been asked by colleagues to do so in a couple of areas. No problem till we came to the DLA when he did not understand (it was the first year of trading) that directors could loan money to the company as well as take it out.

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Replying to DMGbus:
By JCresswellTax
07th Dec 2016 09:59

Very useful list - thanks DMG.

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By lionofludesch
07th Dec 2016 09:46

Last one I did, they spent half an hour looking at the pay records themselves and the rest of the time at the cash book (or what passes for one these days).

They've a passing interest in what's on the pay records but they're much more interested in what isn't but ought to be.

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By bduncan
07th Dec 2016 10:34

.

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By Cleggy1
07th Dec 2016 10:37

Thanks All

If HMRC have given dates of the Payroll records they are coming to check are they allowed to check on records prior to these dates?

I think they came for a phishing exercise and cast their net wide.

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By bumpdinkwhallop
08th Dec 2016 20:38

It would also cover the construction industry scheme depending on the type of client.

The question you should always ask if you think the compliance officer is asking for more then is nessecay to check the company PAYE compliance is " is it reasonable required" get the officer to explain why they want certain information.

Also the opening review letter will say alot. What office is undertaking the review, is it a higher officer etc.

If you had fee protection insurance in place for your clients then you would have someone at the other end of the phone giving you detailed and relevant advice before the review for free

Check out PRofessional fee protection (very good) im sure Abbey tax do it too!

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