Employer Compliance Reviews

HMRC's Employer Compliance Reviews (ECRs) or PAYE Investigations are the most routine inquiries conducted, representing a real risk to any employer, incorporated or unincorporated. This investigation focuses purely on PAYE and National Insurance.

Often, employers neglect their payroll, NIC operation, expenses, and benefits in kind positions because it's a complicated, but small area of tax and HMRC enforcement. Among HMRC's regulatory work, this area has one of the highest cost-to-yield ratios, illustrating the large sums that can often be generated by HMRC investigators here. It is HMRC's responsibility to actively police this area, focusing on:

  • PAYE and National Insurance: their general operation
  • Expenses
  • Termination policies, redundancy payments, and notice payments
  • Workers from abroad, secondees, and interns
  • Payment and remuneration for benefits in kind and non-cash
  • CIS (Construction Industry Scheme) - operations and returns
  • Workers with an employment status or those who are self-employed

It's common for employers to assume that an ECR is such a low-risk audit that they don't need to involve their advisers, as it is a "light touch" and "low risk" audit check by HMRC. The HMRC's Officers performing this work are experts in this very niche area, so caution is required. In their "light touch" routine checks, they aim to find common mistakes, which in turn will allow them to expand their scope into the accuracy of the overall employment tax position of the business. Additionally, HMRC officers would generally expect to collect back taxes for 4, 6 or even 20 years based on any mistake they find.

Require more information?

If you would like more information or would like to speak to us direct then call us on 0161 511 0220. Or if you would prefer, ask us a question online.