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PAYE compliance PAYE or Pay As You Earn is the system by which most of the income tax in the country is collected. It obliges all employers to deduct tax from the earnings of its employees and pay it to the Inland Revenue. All employers have to comply from the largest in the land (the NHS) to the smallest – say a housewife employing a cleaner for a couple of hours a week. The rules and regulations are, of course, numerous and are published elsewhere but here are the ones that cause most difficulty: Completeness and accuracy of PAYE deduction working sheets Correct use of PAYE codes The completing of the P35 (Employer's annual statement) Correct treatment of new employees and leavers Cash payments Expense payments and employee benefits, Compliance with sub-contractors' rules Compliance with NIC regulations Problem areas There are numerous trip-wires for the unwary: Gross payments to casual employees Payments to alleged 'self employed' persons Lump sum expenses Private petrol Spouse's travel and subsistence Travel to work from home and vice versa Trips for purposes other than purely business, e.g. trade fairs, golf, social outings Home telephone Entertaining Expenses for use of home as an office Club subscriptions Goods and services provided free or below market value Lunch Clothing Accommodation Work undertaken at an employee's home Medical expenses The Inland Revenue conducts PAYE inspections and is rigorous in enforcing its regulations. Ensure you comply at all times and, if in doubt on any point, ask us.

PAYE compliance

PAYE or Pay As You Earn is the system by which most of the income tax in the country is collected. It obliges all employers to deduct tax from the earnings of its employees and pay it to the Inland Revenue. All employers have to comply from the largest in the land (the NHS) to the smallest – say a housewife employing a cleaner for a couple of hours a week.

The rules and regulations are, of course, numerous and are published elsewhere but here are the ones that cause most difficulty:

Completeness and accuracy of PAYE deduction working sheets
Correct use of PAYE codes
The completing of the P35 (Employer's annual statement)
Correct treatment of new employees and leavers
Cash payments
Expense payments and employee benefits,
Compliance with sub-contractors' rules
Compliance with NIC regulations

Problem areas

There are numerous trip-wires for the unwary:

Gross payments to casual employees
Payments to alleged 'self employed' persons
Lump sum expenses
Private petrol
Spouse's travel and subsistence
Travel to work from home and vice versa
Trips for purposes other than purely business, e.g. trade fairs, golf, social outings
Home telephone
Entertaining
Expenses for use of home as an office
Club subscriptions
Goods and services provided free or below market value
Lunch
Clothing
Accommodation
Work undertaken at an employee's home
Medical expenses

The Inland Revenue conducts PAYE inspections and is rigorous in enforcing its regulations. Ensure you comply at all times and, if in doubt on any point, ask us.

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