PAYE Risk Review

Jillian O'Sullivan
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With an increasing focus by Revenue on the correct operation of the Pay-As-You-Earn (PAYE) system, now is the time for businesses to review payroll and employment related taxes.

By performing required regular check-ups on processes and systems, businesses can ensure that any potential risk areas are identified before problems arise and a PAYE risk review can help with this.

Employment tax compliance

Businesses have adapted their employee reward packages and are now incentivising employees with various benefits, share awards and pay structures.  A trend towards hybrid working and a global working environment has also developed. These changes to employee reward and benefit packages along with continuous employment tax legislative updates, has increased the required level of employment tax compliance. 

Employment tax covers a broad spectrum and is becoming increasingly complex for employers.  PAYE compliance is an organisation’s responsibility and in the event of a Revenue audit, the burden of proof typically rests with the employer. 

Understanding your PAYE risks

A Grant Thornton PAYE risk review is a comprehensive review of the tax treatment of benefits and expenses provided to employees and how such taxes are reported to Revenue through the payroll reporting mechanism.  Consideration of the underlying benefit and expense policies, procedures and practices implemented by the business to support tracking and recording of key PAYE related data will also be undertaken. 

A PAYE risk review not only highlights and identifies risk areas and possible solutions, such a review can also increase the efficiency of the processes in place by highlighting areas where improvements can be made.

Objectives of a PAYE risk review

  • Review PAYE operations to ensure compliance
  • Highlight any areas of concern
  • Identify any areas of potential exposure and corrective action needed
  • Identify the potential areas where additional tax efficient processes can be introduced
  • Outline best practice parameters in maintaining and recording information
  • Consider control and review processes in the payroll and benefit reporting function

Importance of a PAYE risk review

With PAYE real-time reporting and the impending introduction of automatic employer reporting requirements for certain payments made to employees, Revenue have high visibility on PAYE matters. Furthermore, Revenue are seeking to cultivate a culture of self-review and thus encourage taxpayers to self-review their tax affairs.

The awareness that Revenue have in respect of companies’ tax affairs results in additional pressures to ensure compliance to avoid any financial or reputational damage in an environment of continuously rising tax costs and compliance responsibilities.  A PAYE Revenue audit may culminate in a costly payment of tax, interest and penalties but also in a significant amount of time from key personnel in handling the audit.

For insight and guidance on how a PAYE risk review can assist your business, please contact a member of our Employer Solutions team.