The adviser is now called upon to advise on employer compliance reviews much more frequently than in the past and in doing so he faces a special difficulty, for it is usually the case that the employer operates PAYE himself, without reference to his professional adviser. The adviser is thus called upon to deal with a matter of which he has no detailed knowledge, and often at the stage at which the audit visit has already taken place and irregularities have been discovered.
Furthermore, because of the relative inactivity of HMRC in this field until recently, few advisers have had much experience of dealing with employer compliance reviews. As a result, many reviews have not been contested as strenuously or as effectively as they might have been and employers have paid more than necessary in tax and NIC arrears.
Dealing with employer compliance reviews should accordingly be seen as a practice development opportunity, as well as a requirement for offering a full service to clients. The aim should be to provide advice and guidance on the operation of PAYE and regular ‘health checks’ for the clients who request them. When a client is notified of a proposed employer compliance review, he should be conscious of the need to contact his professional adviser immediately so that he can be involved at every stage and especially during the course of the visit. From April 2004 onwards HMRC have undertaken to ensure that Employer Compliance Teams will send simultaneous notifications of an Employer Compliance Review to both the employer and the authorised tax adviser. To be able to advise his clients and represent them effectively in an investigation, the adviser must familiarise himself with the operation of PAYE, the law and practice relating to earnings, expenses payments and benefits and the way in which employer compliance reviews are carried out.