Employment Tax

PAYE healthcheck ― scope

Produced by Tolley in association Susan Ball
  • 19 Oct 2021 23:28

The following Employment Tax guidance note Produced by Tolley in association Susan Ball provides comprehensive and up to date tax information covering:

  • PAYE healthcheck ― scope
  • What should a PAYE healthcheck cover?
  • Scale of healthcheck
  • Scope of the review
  • Fees
  • Types of healthcheck
  • Approach
  • Planning ― personnel
  • Preliminary fact find / talk through
  • Walk through and sampling
  • More...

PAYE healthcheck ― scope

What should a PAYE healthcheck cover?

A healthcheck can include:

  1. a review of the employer’s PAYE benefit and expenses procedures

  2. interviews with the relevant members of staff and completion of a questionnaire

  3. review of internal documentation and correspondence

  4. examination of a representative sample of the employer’s records

  5. preparation of feedback, identifying any areas of non-compliance ― see the PAYE healthcheck ― outcomes guidance note

  6. practical recommendations

The employer may have an idea of what they want reviewed and may therefore limit the review to a particular area of risk, such as status of workers, termination payments or provided accommodation.

The scope of the review therefore depends on what areas it is designed to cover and the depth required.

Scale of healthcheck

Although the nature of the work being carried out might bethe same, the scale of the work and depth of any review will differ depending on the organisation.

It is advisable that any work must beagreed in detail between the organisation and any external specialist and business terms or an engagement letter agreed so that there can beno doubt as to the work being undertaken, the depth of the review and the protection the organisation can expect.

Scope of the review

In determining the scope of the healthcheck it is important to consider:

  1. budgetary constraints

  2. materiality ― ie the importance / significance of an amount, transaction or discrepancy

  3. timescale

  4. size of organization

  5. area risk

  6. disclosure requirements

It is important therefore to ensure the employer understands any limitations on the scope of the review even if they are imposed by them.

The disclosure requirements of the Money Laundering Regulations 2017 mean that any professional adviser undertaking such work may have a duty to disclose matters to HMRC where it believes there has been a loss of tax to the exchequer. Therefore it is sometimes preferable for the employer to carry out or commission a very high level review of specific areas in the first instance rather than a

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