National Payroll Week
a payroll company; however, this can be a key indicator of fraud. Accordingly, where businesses are offered this service, HMRC advise them to undertake sufficient due diligence to ensure that they do not become a victim of fraud. So, if you do offer this type of service, please be aware that your client may seek some additional assurances from you. HMRC further advises businesses that failure to undertake an appropriate level of due diligence checks can be damaging to them. If it can be shown that a business knew or should have known that transactions in their supply chain were linked to fraud, the business could lose their right to recover the VAT input tax on those transactions despite having made payments to the payroll company. Apart from the right to appeal any appealable decision made by HMRC, the only other recourse the business has is to recover the sums from the payroll company. Unfortunately, the chances of that succeeding are minimal – therefore, HMRC advises that businesses should make every attempt to carry out robust due O ne in five Brits (21%) have equivalent on a national scale to nearly seven million employees. The scale of the problem is significant, with 60% of employ- ees identifying mistakes on their payslips. Additionally, 39% responded that they had been paid late on at least one occasion, after which they felt: l that their employer didn’t care about their wellbeing (48%) l undue levels of stress and worry (47%) l at risk in their financial situation (40%) l less engaged and productive at work (25%). The survey of 2,000 employees, which was commissioned by Zellis, further highlights the acute impact of late payment on financial wellbeing: 37% said they had missed payments on direct debits; 31% said they had gone into their overdraft; 26% changed jobs after being paid late or inaccurately by their employer,
diligence in the first place. It is, therefore, understandable that a prospective client may wish to have some assurances about the service you are providing and we would ask you to fully engage with them in this first step of your business relationship. It should be noted that HMRC will never penalise genuine victims of fraud and wants to support businesses in carrying out necessary checks. HMRC recognises that payroll services are not regulated at all and anyone can offer the service. Additionally, HMRC cannot endorse any professional organisation as we have no control over the checks that they subject their members to. However, we do acknowledge that if a payroll company is a member of the CIPP it is likely, but not guaranteed, that they will be lower risk. It is for this reason that we continue to seek collaboration from the CIPP when exploring ways to establish best practice. All businesses need to undertake sufficient and proportionate due diligence to protect themselves not only from fraudulent payroll companies but also to said they had incurred bank charges with 24% suffering damage to their credit rating. With an increasing trend towards em- ployee self-service, the question of who is responsible for payroll accuracy lacks a firm answer. Only slightly more believe it is the shared responsibility of the employer and the employee (47%), than believe it is the sole responsibility of the employer (44%). However, only a quarter (24%) said that they check their payslip every month, and therefore may not always be aware of the mistakes that are made. John Petter, the chief executive officer of Zellis, commented: “I was surprised by the results of the survey, since in our experience of working with some of the UK’s largest employers on their payroll, the standards of accuracy and reliability are very high. But this research suggests our customers’ experience is atypical, and that business leaders need to champion the work of
address other risks inherent in participating in a labour supply chain. While the type of service provided by the payroll provider and the level of risk the business is exposing itself to will vary depending on the business itself, guidance (http://bit.ly/2jTnzOX) here provides pointers for robust due diligence. This includes giving details on how a business can report payroll outsourcing to HMRC if they have any concerns. HMRC looks forward to a long collaborative relationship with the CIPP through the EPG but also on an ad hoc basis. HMRC will seek to engage with the payroll community via the CIPP seeking their views, not only on how future policy and legislation will impact on PCF but also, just as importantly, how any changes will affect legitimate businesses. HMRC is keen to ensure that any future changes have minimal impact on those businesses that abide by the rules and pay over the taxes and NICs that they are due to pay. We recognise that working with the honest tax-paying professionals within the payroll profession is key to cracking the fraud. n payroll professionals to ensure employees have their expectations met for accurate, on-time pay. “Our research dispels the myth that pay- roll doesn’t have a strategic impact on busi- nesses. Contribution to employee churn, a reduction in engagement and a negative impact on productivity all hit a business’s bottom line. Add to this the financial and reputational risk of legislative non-compli- ance, and it’s clear that payroll should be a board-level discussion.” Helen Hargreaves, CIPP associate direc- tor of policy, commented that: “Payroll pro- cessing is becoming increasingly complex, with additional duties introduced every year. Although purchasing good quality payroll software will shoulder some of the burden, it’s crucial that payroll practitioners keep themselves up to date with all the changes to legislation, ensuring they are best placed to meet their obligations.” n
The impact of late or inaccurate payments
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| Professional in Payroll, Pensions and Reward |
Issue 54 | October 2019
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