PAYE Investigation

Employers can expect PAYE inspection visits every three to five years. The authority for these visits rests in Regulation 55 of the Income Tax (Employment) Regulations 1993, which requires the employer to produce records such as wages’ sheets, deduction working sheets etc. to any authorised officer of the Board.

If the PAYE Auditor finds evidence of tax evasion on cash control or other maladministration he will notify the Inspector of Taxes so that a review of the business accounts may be considered. The body responssible for PAYE investigation is called SCO (Special Compliance Office).

There will be no such thing as a standard investigation, but there are many issues that are common to PAYE investigation work such as:

• Payments to casual employees
• Allowances paid in respect of unsocial hours
• Overtime payments
• Incentive schemes
• Payments for additional duties
• Suggestion schemes
• Categorisation of employees as employed or self-employed
• Working rule agreements
• Additional payments such as lunches and laundry allowances.

Because the PAYE regulations impose specific obligations on employers, there are a range of penalties that can apply concerning failure to meet these obligations. We suggest you get your house in order before it is too late.