PAYE Investigations


PAYE Investigation, also known as an Employer Compliance Review

A PAYE investigation is conducted by HMRC to ensure an employer or contractor is meeting their tax, National Insurance (NIC) and Construction Industry Scheme (CIS) obligations. An investigation often begins at the employer’s premises, which enables HMRC to hold conversations without notice with diverse personnel and review prime records. HMRC’s focus often includes:  

  • operation of PAYE and NIC

  • the reporting of Benefits in Kind on forms P11D (especially car and fuel)

  • the employment status of workers

  • the correct treatment of entertainment expenses

  • the operation of IR35

  • termination payments

  • travel expenses

  • vans

  • salary sacrifice

  • operation of payments to subcontractors under CIS

  • the treatment of ex-pats and in-pats

To the extent that HMRC establish an additional liability to tax or NIC, interest on any late duties will be charged and potentially a monetary penalty, based on a percentage of the tax and/or NIC due.