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Being prepared for a HMRC PAYE audit and how to avoid paying the penalties

Every international company, with globally mobile employees, may fear a visit from HMRC PAYE auditors. There are underlying stresses for any organisation, in ensuring that you are compliant in all aspects of your Home and Host country Tax and Social Security obligations. The international aspect can exacerbate the situation. Are you confident that you would come out of a PAYE audit unscathed?

In the past, we have worked with many organisations in preparation for, or in the wake of a PAYE audit. It is imperative, however, that companies get their PAYE obligations right in the normal course of business.By way of example, we worked with a logistics company who outsourced their expat assignment programme to us. During our initial audit we reviewed home and host country payslips, a number of discrepancies were identified. The further we investigated, the more discrepancies we found. Finally, our client was persuaded to undertake a detailed compliance audit. There were anomalies in nearly all of the payroll/HR files reviewed in respect of their overseas assignees. For example:

– Home and host country tax and social security not being accounted for correctly
– UK national insurance being calculated on the incorrect remuneration
– Social security certificates not being in place where required
– Required immigration status incorrect

As a result of this detailed audit, it transpired that some assignees were owed money by our client company (the employer); others owed the employer money; and significant underpayments to HMRC also needed to be resolved.The company’s tax exposure following this compliance audit of 50 international assignee files looked like this:

– Assignee overpaid remuneration – £102,590
– Primary & Secondary Class 1 NIC owed to HMRC – £70,390
– Pension contributions owed to the plan administrator – £14,547
– Refund of income tax due to the employer- £10,705

These discrepancies were all resolved prior to the end of the tax year, without the need to make disclosure to HMRC and potentially pay penalties. The question for you is: “Can you afford to take the risk and pay the penalties?”. It is not too late for you to correct any potential errors before the end of the current tax year on 5th April 2015. IPM can help to ensure that you are 100% compliant in all areas and give you a stress-free run up to the year end! Why not ask us to undertake a sample audit of your current assignee population.

Please call Julie Buchanan on 0845 458 5643 or email Julie.buchanan@ipmglobalmobility.com

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