They begin at the start of each tax year, when your company must have all records precise and up to date. With the introduction of Real Time Information (RTI), this is now more important than ever. All staff payments and deductions must be reported to the HMRC when they are made.
The start of the tax year
Before the new tax year, you must ensure that your payroll software has the appropriate rate changes for income tax and National Insurance contributions (NIC). The new rates of tax and NIC will be sent to you by HMRC in a P9X form that covers your personal allowances. If an employee’s tax code has changed the HMRC will issue a P9 form.
To make certain that each member of your staff pays the correct amount of tax and National Insurance, your payroll records must be kept organised and up to date. HMRC can check that legislation is being complied with and your workforce is being paid the correct statutory amount, including National Minimum Wage.
For the previous three years plus the current year, your company must preserve all PAYE records. Along with all payments and deductions, you must record all employee information. A penalty of up to £3,000 could be enforced if you fail to maintain accurate payroll records. A penalty could also be issued for late payments to HMRC or Inaccurate payments of income tax or NIC.
Over the year
Accurate records of each employee’s pay and deductions are needed on each payday, even if they earn below the taxable amount. Details must be sent to HMRC as part of RTI, every time a member of staff is paid. Any changes in your company’s workforce must be reported to HMRC, including an employee starting or leaving the company.
In the same way as other income, annuity payments or pension payments must be reported to HMRC using RTI and when making trivial commutation payments special procedures will apply. The introduction of RTI has simplified procedures but payroll is still a complex issue, best handled by the experts.
For help and advice with any HMRC PAYE issue or tax investigation call 0800 471 4546 for a 24 hour service where a team of experienced tax investigation experts are waiting to take your call.