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HMRC PAYE Visit - Should I Be Worried?

HMRC asking for details of DLA

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Our client was chosen for a PAYE visit.  They operate their own payroll and CIS (operate in building sector), so we didn't really get involved, other than a meeting to highlight the issues which they may face.  Visit went well, HMRC officer coming over as fairly friendly, didn't really find anything.  However, he's now asked for all debits and credits on the DLA for an 18 month period.  It's all private, but there's some fairly big expenditure in there.  Unfortunately, despite being told not to, they tend to use the company bank account for making private payments (jewelry, holidays, car).

Should I be worried?  Can I refuse to provide this level of detailed information?  The DLA is cleared once a year by a £100k dividend (with paperwork).

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By petersaxton
10th Jan 2019 06:32

"Can I refuse to provide this level of detailed information?"

No, you can't refuse. It's not detailed.

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By Wanderer
10th Jan 2019 07:43

Richardrussell wrote:

Should I be worried?  ....... The DLA is cleared once a year by a £100k dividend (with paperwork).

Beneficial loan BIK springs to mind.
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Replying to Wanderer:
By SteLacca
10th Jan 2019 08:25

Or an attempt to treat it as untaxed remuneration.

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Replying to SteLacca:
By johngroganjga
10th Jan 2019 08:42

We are told the loan account is cleared with a dividend. How is that untaxed?

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Replying to johngroganjga:
By SteLacca
10th Jan 2019 10:03

I've handled a big ER review recently, and in the same circumstances the Inspector attempted to argue that the DLA was actually remuneration and the dividend was, therefore invalid. He was hoping for a PAYE settlement.

Suffice to say, I won the argument, which is why I qualified my reply with "attempt".

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By johngroganjga
10th Jan 2019 08:10

You don’t give us any reason why you might be worried, so how can we help? What are the irregularities you fear coming to light?

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RLI
By lionofludesch
10th Jan 2019 08:47

Look on the bright side - in future, the client might listen to you to avoid future massive interest benefit tax charges.

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By Adam12345
10th Jan 2019 08:54

Worst case scenario is that HMRC view these as the company fulfilling a liability of an employee and the payments being subject to Class 1 NIC's, rather than a 'loan'.

Best case scenario is that HMRC are just looking for a benefit-in-kind on the loan which has exceeded £10,000 at some point in the tax year.

If you told them not to treat the company bank account as a personal account, and they ignored this advice, you have nothing to worry about, but your client might.

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By andy.partridge
10th Jan 2019 09:51

Should I be worried? Can I refuse to provide this level of detailed information? The DLA is cleared once a year by a £100k dividend (with paperwork).

Does it reconcile with the P11D your client didn't file?

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By Richardrussell
16th Jan 2019 12:12

Thank you for your replies, appreciate it.

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