The tax and NIC position of employment income has become more complex over the years, with the introduction of substantial legislation to counter tax saving opportunities. The Office of Tax Simplification has been reviewing and advising the Government on simplifying the tax system and they have been responsible for a number of changes. However, it seems that for each simplification HM Revenue & Customs introduce another set of complex rules.
In recent times the government has sought to raise more from employers, with the recent increase in Employer NIC and the promise to invest more in tax investigations. Employers need to ensure that they are compliant with current HMRC processes and procedures. HMRC has recently confirmed that from 6 April 2026 employers will be required to payroll the majority of benefits in kind. This will reduce employer compliance in the P11d process but employers will need to review the benefits provided and the mechanics of taxing these through the payroll system.
Compliance
There are a number of complex areas that employers often find difficulty with and these can lead to employee’s being over taxed or HMRC pursuing the employer for failing to withhold the correct amount of tax (usually with interest and penalties). Some of the most common errors occur in the taxation of termination payments, shares and share options, benefits in kind, third-party benefits, employment status disputes and operating PAYE/NIC on expatriate employees (particularly where overseas visitors work for the UK company without transferring to the UK payroll).
We can provide guidance and support in all areas of employment taxes, including:
- Payroll and RTI
- P11d reporting
- PAYE Audits/Reviews
- PAYE settlement agreements
- Taxed Award schemes
- Termination payment reports
- Expense policy and design
- Tax treatment of agency workers
- Construction Industry Scheme
- IR35 issues
- Form 42 reporting
- Senior Accounting Officer reviews
PAYE and NIC Audits
HMRC conducts employer compliance reviews on a regular basis and finding yourself in the middle of one of these can be daunting. It may even be that you have discovered an error has been made and you need to make a voluntary disclosure to HMRC but are not sure how to do this. We have significant experience of handling enquiries of this nature and negotiating settlements with HMRC.
Due Diligence
You may be in the process of buying another business and need to undertake due diligence of their processes and procedures. We can provide a report identifying any potential risks that may exist at the business allowing you to protect your investment.
We have a significant amount of experience in advising employers on all these matters and would recommend that advice is sought as soon as possible.
