Supporting Guidance: employer compliance: guidance by subject: inaccuracies: employees for whom code number not known - inadequate records
Where the employer has inadequate payroll records, you should
- draw the employer’s attention to the Employer Helpbooks which explain what records should to be kept.
You should confirm that
- where the employer reports PAYE in real time, the Real Time Information (RTI) starter checklist (or equivalent) is held and all employees are included on the payroll
- for a non-RTI employer, employees for whom a form P46 is not held, did not work for more than one week
- payments above the PAYE threshold were made to employees who worked for one week or less
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- if a form P38A (up to and including 2012-13) is required by HMRC.
When investigating such payments you should
- carefully examine any records that are held
- avoid accepting explanations at face value
ask pertinent questions about
- how pay is calculated
- the nature of the work carried out
- the method of recruitment
- the true nature of the payments
- the identity of the recipients
- whether as many workers were needed to do the work as the employer claims
- ask where the work was carried out with a view to establishing if the location of the work is readily accessible to a pool of casual workers for example waiters/waitresses for functions.
- discount that the payments went to regular employees, but
- consider that there is liability in respect of employees for whom codes were not known
- compute the tax and NICs due
- obtain sufficient evidence for Regulation 80 determinations (COG915150) and/or Section 8 NICs decision (COG915155)
remind the employer that records of the names and addresses of employees and the amounts paid to them are required to be maintained for
- the PAYE/NIC system to be operated correctly, and
- accurate returns to be made
- where appropriate seek a settlement from the employer.
When concluding the case, you should advise
RIS caseworker by Cross Tax referral form of
- the instructions given to the employer, and
- an opinion of whether the employer is likely to maintain the required records in future