In this week’s Money Matters- Ask the Experts column, from Goldwyns Chartered Accountants, based in Southend, Robert Howe FCA, a director at the company, provides his thoughts on HMRC compliance checks.

Dear Goldwyns, I have heard a number of scare stories regarding HMRC tax compliance checks, particularly regarding payroll. How do I ensure my new business is compliant with its payroll responsibilities?

Robert Howe responds:

Ever since the advent of PAYE, all employers have effectively been unpaid collectors of tax. These duties have now expanded to include the payment of benefits, the collecting of student loan and child support payments, dealing with pension auto enrolment and applying attachment of earning orders. This is not a complete list of duties but gives an indication of what employers must deal with whilst at the same time being subject to increasingly draconian penalties from HMRC and other government departments if they get things wrong.

Whilst certain aspects of payroll can be dealt with manually, the introduction of RTI - Real Time Information – a number of years ago means practically all employers now use software or an external payroll provider to help them with their payroll responsibilities. The latter is a significant step towards compliance that is looked upon very favourably by HMRC.

The key to taking on new staff is to get things right from the start. HMRC provides a new starter checklist on their website and this should be used to ensure you have the correct details on file for each applicant. Once collated, this data should be entered onto your payroll software or passed to your external payroll provider for processing.

Ask for and take copies of applicants’ ‘right to work’ documents as these will allow you to check if they have the legal right to work in the UK as well as support other data on the new starter checklist. For example, whilst all data on the checklist is important, the applicant’s date of birth often sets the minimum rate of pay that must be paid to them as well as the category of National insurance that applies.

All employees should have employment contracts setting out the terms and conditions of their employment. These should be signed by each employee and kept in separate personnel files. It is important that each contract is reviewed regularly to ensure the contents accord with the actual employment as this will protect you in the event of a dispute.

Should you receive a letter from HMRC regarding tax compliance checks, contact your accountant immediately as they are best placed to advise.

This article was first published in the Southend Echo on 8 August 2017.