Local employers could find themselves in hot water if they fail to ensure employee taxes are in order, as HM Revenue and Customs gears-up for a clampdown, according to professional services firm, KPMG.
According to employment tax advisers from KPMG People Services in Cambridge, HM Revenue and Customs now expects employers to take a more proactive role in managing their PAYE/NIC risk through the implementation of robust systems and procedures.
This coupled with the fiscal authority’s new risk-based approach to compliance, could mean that some businesses are put under the spotlight and severe penalties enforced for non-compliance.
“For any employer, the thought of a visit from HMRC to conduct an investigation on their PAYE/NIC is concerning and potentially costly. Not only will they have to contend with the disruption, but they could also face the direct costs of settling the tax, interest and penalties that may arise," said Brendon Howlett from KPMG’s team in Cambridge.
“Furthermore, a number of local companies could find they become further scrutinised as a result of HMRC’s drive towards risk based reviews. This means that HMRC will specifically target those employers where they perceive there to be a greater likelihood of non-compliance.”
Key areas under scrutiny will include employment status of workers, termination payments, employee entertaining, the implementation of share schemes and planning arrangements, for example holiday pay schemes.
“Local businesses need to ensure their compliance procedures are effective and in line with the demands from HMRC. In addition, they should act now to get an understanding of the level of risk that exists in their business and rectify any key areas in order to lower their risk profile with HMRC,” said Howlett.
KPMG has developed a model to help businesses to assess their risk areas. This will then enable them to take any necessary corrective action in order to avoid incurring any unnecessary penalties and receiving unnecessary attention from HMRC.
“Businesses must act now to ascertain their current position and where needed, work towards improving it. The disruption and risk to reputation could be costly if any areas of weakness are left unaddressed,” Howlett said.
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