Payroll insight
Group has had some resourcing issues recently. What we can say is that it is more likely that for those bodies with higher risk ratings the more frequent and in-depth the BRRs will be. For customers that have been awarded moderate, moderate-high and high-risk categories, HMRC suggests that BRRs will usually be carried out on an annual basis. Again, whether this would be the case in the public sector is unclear, but the prospect of more frequent and in-depth reviews should provide incentive enough to address the relevant issues. During the BRR, which is a collaborative process, HMRC determines how the customer mitigates tax risk through their behaviour, specifically in three areas. These are summarised below with emphasis on the required behaviour to help achieve a low-risk rating. ● ● Systems and delivery – The organisation must be able to demonstrate that it has processes and suitable resources in place to deliver timely and accurate returns, declarations, payments and claims that are suitable for the size
documented tax policies and procedures and share these on request from HMRC. All returns and payments must be submitted to HMRC on time. ● ● Internal governance – The organisation will have clear accountabilities up to and including the board for the management of tax compliance risk and tax planning and have appropriate tax accounting arrangements to enable accurate tax reporting. ...expect the programme of visits to be stepped up in the coming months and years The organisation must appreciate its potential liability under corporate criminal offence legislation and have taken steps to profile and manage the risk of failing to prevent the facilitation of tax evasion. It must also identify and promptly communicate to HMRC any significant uncertainties or irregularities. ● ● Approach to tax compliance – The
organisation is expected to maintain an open and transparent relationship with HMRC and be open with HMRC in real time about how tax compliance risk is managed across all relevant taxes and duties. The organisation must not be involved in tax planning other than that which supports genuine commercial activity. n So, what now? Clearly these are significant changes across the large business community generally and public sector bodies are very much part of that. We are aware that HMRC has already started, and finalised, a number of the new BRRs and we can expect the programme of visits to be stepped up in the coming months and years. As with any compliance process that is run by HMRC, it is advisable to pre-empt such reviews well in advance by reviewing internal processes and policies and considering the behaviour that underpin these. This could involve working closely with your advisers and ensuring that there is the right level of ‘buy-in’ within the organisation to help keep the risk rating low.
and complexity of the business. The organisation must maintain
P46 error lead to income tax underpayment M s Riquier (‘Ms R’) was employed by Intelligent Positioning Ltd from the beginning of tax year (HMRC) received Ms R’s self-assessment return for tax year 2015/16 which declared foreign income of £1,000 for the tax year but did not report any employment income. In January 2018, HMRC opened an enquiry under section 9A of the Taxes Management
arose because of the entry in the P46. In April 2018, HMRC issued a closure notice and amendments to Ms R’s tax return showing additional tax due of £1,227.85 of which £827.85 was attributable to the employment income. Ms R replied, saying that the options in form P46 were imprecise, and that though none quite matched her situation it made sense to select statement B as “Towergate was my only job in December, I wasn’t going to return to the other job. It was just to end a notice”. The First-tier Tax Tribunal dismissed Ms R’s appeal against the closure notice. (The case report can be found here: http://bit. ly/2MmDGQN.) n
2015/16 until 17 December 2015. She commenced employment with Towergate Underwriting Group (‘TUW’) on 7 December 2015. TUW applied tax code 1060L on the non-cumulative basis, in accordance with Ms R completing statement B in form P46 (since replaced by the starter checklist). In December 2015, Ms R benefitted from two sets of personal allowances and additional entitlement to the basic rate tax band being set against the income received from these employments. In January 2017, HM Revenue & Customs
Act 1970 and requested information in respect of Ms R’s employment income. In March 2018, Ms R emailed HMRC expressing concern that the underpayment of tax was caused by employer error. She complained that TUW had applied her allowance twice, saying she was not in a position to check whether the accounting department had made a mistake. HMRC responded by e-mail and provided an explanation of how the underpayment
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| Professional in Payroll, Pensions and Reward |
Issue 55 | November 2019
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