Pay Roll Tips & Guide
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The purpose of PAYE audits by the inland revenue is to confirm that PAYE has been properly operated on all earnings and payments in accordance with the rules etc set out in the booklet, Employer's Further Guide to PAYE and NICs (CWG2).
The inland revenue, on visiting your business premises, are likely to check:
- PAYE deduction working sheets for completeness and accuracy
- Correct use of employee codes
- Reconciliation of the records with the P35 (Employer's annual statement)
- Correct treatment of new employees and leavers
- Cash payments where PAYE has not been operated.
- Expense payments, employee benefits, and their correct disclosure on forms P11D or P9D
- Compliance with terms of any dispensation
- Compliance with sub-contractors' rules
- Compliance with NIC regulations
The following are the main areas where problems may arise:
- Accommodation
- Clothing
- Luncheon expenses
- Expenses for use of home as an office
- Home telephone
- Lump sum expenses
- Work undertaken at an employee's home
- Private petrol
- Entertaining
- Club subscriptions
- Medical expenses
- Goods and services provided free or below market value
- Travel to work from home and vice versa
- Gross payments to casual employees
- Spouse's travel and subsistence
- Payments to alleged "self employed" persons
- Trips for purposes other than purely business, e.g. trade fairs, golf, social outings etc
Employers paying £1 a week or more to any employee without a form P45 must request a form P46 to be completed. If the employee signs that this is his or her only main employment, then PAYE and national insurance need not be deducted unless payment is in excess of the national insurance primary threshold. The inland revenue is applying this procedure strictly and any employer who employs a person with out a P45 or a P46 may find them selves paying the tax and NI for that employee.
For further information on the benefits of out-sourcing your payroll to us please complete the form via our contact page
or telephone us on 01634 (Medway) 819526. |
