Inland Revenue payroll investigations

As an employer, you can expect to have your PAYE records inspected every few years.

The purpose of these inspections is to confirm that you have correctly operated PAYE on all earnings and payments made, in accordance with the rules and regulations for employers contained in publications produced by the Inland Revenue.

The inspection will take place on your premises. The following are likely to be checked as part of the inspection:

• accuracy and completeness of PAYE deduction working sheets
• reconciliation of your payroll records with the Employer's annual statement (P35)
• correct treatment when an employee starts or leaves
• correct use of employee tax codes
• cash payments made without deduction of tax
• benefits and expenses paid to employees, and disclosure on forms P11D or P9D
• correct application of any dispensations.

For information about personal tax investigations, please refer to Digita TaxCentral.