Payroll investigations increase in 2014/15

HMRC increased the number of investigations into suspected payroll tax fraud by 13% in the year to 31 March 2015 from 2 197 to 2 488. Known as employer compliance reviews these are intended to target businesses that deliberately commit fraud.

The reality however is different according to Pinsent Masons. The law firm said these investigations were an opportunity for “easy wins” for HMRC due to genuine errors made by employers when calculating complex employment taxes.

Senior associate Chris Thomas said: “While it appears that HMRC are getting tougher on payroll tax fraud what often ends up happening is that they pick the low-hanging fruit of employment tax errors.”

He added: “Arrangements involving internationally mobile employees can prove challenging for employers. It can be difficult to determine how much tax needs to be paid in each jurisdiction and employment tax rates vary from country...