HMRC seems to be sending out more questionnaires to businesses at the moment. The latest questionnaire is a “Check of employer records”. It appears that HMRC these days seemingly prefers the use of a letter and a questionnaire rather than the more common face to face visit by a PAYE inspector
The tone of the letter and content of the questionnaire gives the impression HMRC is fishing for a risk.
The covering letter with the questionnaire explains that a “Check of employer records” is underway:
“Every year we check the records of a number of businesses to make sure that they are meeting their tax obligations as an employer. I have now selected your business for a check.”
The letter goes on to identify the period chosen for checking, before explaining the need to look at the systems the employer has in place in order to meet their obligations as an employer. It continues:
“Firstly, please fill in the enclosed questionnaire so I can understand how your business operates. I also need to see some of your records. When you send back the completed questionnaire, I will phone to speak with ‘the responsible person’ of the business to discuss any additional questions I may have. This is the person who has overall responsibility for ensuring that you meet your PAYE obligations. At this stage, I will tell you what records I need to see.”
Completion of the questionnaire is then requested in the letter, usually alongside a limited request for supplementary information, such as a copy of the director’s loan account, with all the paperwork to be submitted by a specified date.
The questionnaire is 8 pages in length
All of the sections within the questionnaire have potential tax traps and it is important to keep a record of what is discussed during an employer records check, whether over the telephone or in a face to face meeting.
The logistics of the initial phone call will need to discussed. Ideally you will want your accountant to be present. The phone conversation should be handled as a conference call. Notes should be made of the pertinent issues discussed because you will not receive a copy of the telephone conversation minutes made by the HMRC officer.
It is worth remembering once something is said to an HMRC officer, it cannot be retracted, so you should not give an answer which is speculative or guessed, or advanced in the spirit of co-operation to appear to be helpful. Answers given should be based on fact and evidence.