PAYE Investigations
PAYE Investigation Solicitors
HMRC Tax Investigations wields broad investigative powers. When facing an investigation both companies and individuals need representation from experienced solicitors and accountants who are well-versed in challenging and negotiating with HMRC.
Regardless of whether you are confronted with a civil tax investigation or a criminal one, our tax investigation solicitors and specialist accountants can provide confidential and cost-effective advice and representation.
PAYE Investigations Overview
HMRC regularly conducts PAYE investigations into businesses to determine whether PAYE has been operated correctly. These investigations are focused on ensuring that businesses comply with their obligations to deduct and pay tax and National Insurance for employees accurately.
A PAYE investigation typically involves an on-site visit from HMRC officers, who will review the business’s records and accounts. They will also question the staff responsible for operating the PAYE system to ensure it is managed properly. These investigations not only cover the payment of wages and salaries but also focus on how expenses and benefits are recorded and reported. HMRC will also examine whether individuals classed as self-employed should have been treated as employees, known as status enquiries, and review less common transactions such as redundancy payments.
In some cases, HMRC may also check the operation of the Construction Industry Scheme or look into how your business handles international workers brought in temporarily.
It is common for HMRC to use the information gathered during a PAYE investigation to assist other areas of the tax authority, which can lead to additional investigations. For example, a PAYE review could trigger further inquiries into VAT, Personal Tax, or Company Tax matters, particularly focusing on the tax affairs of business directors or proprietors.
Even though many businesses now use computerised payroll systems, human interpretation still plays a critical role in the data entry process, which can sometimes result in unintentional errors. These mistakes, often made by junior staff, could have significant tax consequences. Additionally, since the introduction of Real Time Information (RTI) in April 2013, HMRC has become more vigilant in ensuring that all employers are properly adhering to RTI requirements.
PAYE Tax Investigations & Disputes
The PAYE (Pay-As-You-Earn) system is HMRC’s method of collecting income tax and National Insurance contributions directly from employees’ wages in the UK. Employers are tasked with deducting the correct amount of tax and National Insurance from their employees’ salaries and submitting these payments to HMRC, either monthly or quarterly.
When discrepancies arise, such as underpayments or errors in deductions, HMRC may initiate a PAYE tax investigation. These investigations can be complex and potentially lead to penalties if the employer is found to be non-compliant. If you are facing a PAYE investigation or dispute, it’s crucial to seek expert legal advice to ensure your business is protected and any issues are resolved efficiently.
PAYE Investigations & Compliance with Tax Law
PAYE investigations are typically conducted by HMRC every six years, though in some cases, there may be longer gaps between routine inspections. However, if your business has raised concerns in the past or HMRC suspects non-compliance with the PAYE system, these investigations can occur more frequently.
When HMRC initiates a PAYE investigation, they will inform you in advance and arrange a meeting at your business premises. It is essential to have a tax specialist present to handle any questions raised by HMRC officers. During the investigation, HMRC will review your company’s records, including payroll and expense claims, to ensure everything is in order.
At Axis Solicitors, our experienced tax experts can assist you in organising the necessary documentation and ensuring full compliance with HMRC’s requests, helping to safeguard your business throughout the process.
PAYE Services for Employers
The PAYE process can be a complex challenge for employers, often requiring the assistance of an accountant to ensure all legal obligations are met. HMRC routinely conducts PAYE audits to verify that employers are compliant with their responsibilities and that the correct documentation has been filed. If HMRC identifies any non-compliance, they may issue penalties or escalate the matter by conducting further payroll investigations. Employers have the right to request that HMRC reconsider any penalties imposed.
If your business has been issued fines or penalties, or if you are facing a payroll investigation, it’s essential to seek legal advice immediately. At Axis Solicitors, we can provide clear guidance and, if necessary, make detailed representations on your behalf to HMRC, explaining why the penalties should not apply. Should the need arise, our experienced advocates can represent you through the appeals process in Tax Tribunals to challenge HMRC’s decisions.
PAYE Services for Employees
If HMRC has contacted you regarding unpaid income tax, they may seek to recover the underpayment by adjusting your tax code for the upcoming tax period. Underpayments can often occur due to errors, such as being assigned the wrong tax code or miscalculations in your tax deductions.
If you believe that the underpayment is not your fault or has been incorrectly calculated, contact our specialist advisers at Axis Solicitors. We will assess your case and advise on the appropriate steps to take, including guiding you through HMRC’s internal review procedures to resolve the issue efficiently and fairly.
How Can Axis Solicitors Help?
PAYE can be a complex area, and errors in its operation can lead to HMRC seeking to recover underpaid tax and National Insurance Contributions (NIC), potentially going back several years. This may also involve interest charges and penalties.
At Axis Solicitors, we specialise in tax investigations and have a team of experts, including former HMRC PAYE inspectors, who can assist you throughout the investigation process. We will address HMRC’s queries regarding your PAYE operations and work diligently to minimise the impact of any errors identified. Our team will negotiate on your behalf to reduce any proposed tax liabilities and limit financial penalties as much as possible.
If HMRC is planning to carry out a PAYE investigation into your business, or if one has already begun, contact us for a free, confidential discussion. We offer a complimentary initial consultation to explore how we can assist you in managing the investigation and protecting your business.
Solicitors & Accountants for Paye Investigations
At Axis Solicitors, our team of skilled tax investigation solicitors and accountants leverage over 15 years of experience in defending clients facing HMRC investigations. Whether your case involves PAYE investigations, tax fraud allegations, or undeclared tax issues, we offer robust and strategic legal representation tailored to your specific needs.
With a proven track record of successfully handling tax cases, our results-driven experts provide services to both high-profile individuals and business owners across Manchester, Birmingham, and London. Regardless of the case’s complexity or scale, we remain fully committed to achieving the best possible outcome for our clients. We also provide remote and other tailored legal services on your demand.
FAQ: PAYE Investigations
During a PAYE employer compliance visit, HMRC will initially request key data such as employee names, National Insurance numbers, wages, deductions, and P11D forms. Specific time periods may be selected for detailed review.
You can also expect face-to-face or virtual interviews, where HMRC officers will ask about your payroll processes, internal controls, and record-keeping practices. The primary aim is to assess whether your business is adhering to PAYE regulations. If any issues or discrepancies are identified, HMRC may expand the scope of their investigation.
It is important to cooperate fully during the visit, while also ensuring that your rights are protected. Seeking professional legal advice from experts like Axis Solicitors can help you navigate the process smoothly and address any concerns that may arise.
Yes, you can challenge HMRC’s findings if you believe they are incorrect. The first step is to request an internal review, where HMRC will reassess their decision. If you are still unsatisfied with the outcome, you can escalate the matter to an independent tax tribunal. Providing new evidence or demonstrating alternative interpretations of tax regulations can strengthen your case and potentially overturn the initial conclusions.
However, the appeals process can be lengthy, and it is advisable to seek guidance from a solicitor or tax specialist to ensure the best possible outcome.
A PAYE compliance visit or investigation by HMRC can be triggered for a variety of reasons. Common triggers include:
- Complaints from employees about incorrect tax codes or deductions
- Irregularities in Real Time Information (RTI) submissions
- High levels of director expenses
- Reports from ex-employees regarding payroll practices
- Use of cash payroll systems
- Discrepancies between payroll records and the company’s accounts
Additionally, HMRC may randomly select businesses for PAYE inspections, particularly in sectors like construction where compliance issues are common. These investigations aim to uncover payroll errors, non-compliance, or potential fraud within your business.
If your business is facing a PAYE compliance visit, it’s important to seek expert legal advice to ensure you’re fully prepared. Contact our experienced team at Axis Solicitors for guidance through the process.
If HMRC identifies errors in your payroll during a PAYE inspection, the consequences will depend on the nature of the mistake. Innocent errors often lead to a voluntary disclosure to correct the issue, with interest charges and, in some cases, penalties on any underpaid tax.
However, if the errors are found to be deliberate or indicate tax evasion, this could result in a more thorough investigation and substantial fines. Employment intermediaries, such as umbrella companies, are particularly vulnerable to penalties for incorrect reporting.
To minimise risks and demonstrate compliance, it’s advisable to keep well-organised, digital payroll records that can be easily reviewed during an inspection.
If HMRC identifies errors in your payroll during a PAYE inspection, the consequences will depend on the nature of the mistake. Innocent errors often lead to a voluntary disclosure to correct the issue, with interest charges and, in some cases, penalties on any underpaid tax.
However, if the errors are found to be deliberate or indicate tax evasion, this could result in a more thorough investigation and substantial fines. Employment intermediaries, such as umbrella companies, are particularly vulnerable to penalties for incorrect reporting.
To minimise risks and demonstrate compliance, it’s advisable to keep well-organised, digital payroll records that can be easily reviewed during an inspection. If you are concerned about these risks, seeking advice from our solicitors and experienced accountants who specialise in PAYE and tax law can help ensure your business remains compliant and prevent costly penalties down the line.
Voluntarily disclosing similar PAYE errors for more recent open years can be a smart move. If past payroll mistakes were identified in periods now beyond HMRC’s enquiry window, taking the initiative to correct these issues demonstrates a proactive and responsible approach.
This can often help reduce further penalties and may result in only interest charges, rather than additional fines. Voluntary disclosure typically reflects better on your business than waiting for HMRC to identify further discrepancies during future audits.
It is always advisable to consult a PAYE solicitor, not just a tax specialist. Solicitors provide comprehensive legal advice, ensuring that your rights are fully protected throughout the process. At Axis Solicitors, we can leverage this distinction by ensuring that our solicitors, are supported by our specialist tax accountants, to allow our solicitors to maintain your legal privileges where applicable. This ensures that any sensitive communications related to legal advice remain confidential throughout the investigation process.
Yes, you can revise your previous accounts to include necessary tax adjustments. If certain tax provisions were missed or incorrect tax treatments were applied, you may be able to correct these in the current financial year. In cases where significant adjustments are required, such as missed tax reliefs or errors, you may need to amend your accounts and resubmit them to HMRC and Companies House.
However, revising past accounts can attract HMRC scrutiny, particularly if the changes are substantial. It is essential to ensure compliance with tax laws during this process. Consulting one of our tax solicitor is advisable to ensure the amendments are accurate and minimise the risk of triggering further investigations.
HMRC PAYE Enquiry?
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Worrying about a PAYE or Payroll Investigation by HMRC? Our PAYE Investigation Solicitors offer client privilege, and our accountants provide specialist tax expertise.
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