36 taxation
Transforming the way companies manage their tax obligations
The introduction of real time information reporting on how employees are paid, a focus on fair pay, the introduction of pension auto-enrolment and recent headlines about the procurement of temporary staff from overseas, all go to show that HR and employment tax is firmly under the microscope. According to Debra De’Ath, a director in the human resources service team in the south east for PwC, businesses face a maelstrom of tax changes all coming together at once
To help companies stay in control, PwC has just launched HR Tax Risk Assurance, a programme developed to support all tax risk compliance work, including HR taxes.
“We’re particularly seeing an increase in the number of HMRC employer tax compliance reviews and it doesn’t matter if you have 50 employees or 5,000, you have to comply,” she said.
“PwC’s approach to HR tax risk assurance begins with a straightforward assessment of your reward strategy. The way in which the review is structured is innovative and completely scalable and has been developed specifically to identify and bring together all tax expertise in one consistent approach.
“It’s designed to be very easy to use. We assess what a client actually needs and we work with them from the outset, ensuring all the necessary processes and controls, roles and responsibilities are clearly defined. Clients like it because it enables them to report intelligently across their departments and feed up to the board.”
Although organisations recognise tax is an important issue, she says very often it isn’t given the same priority as other potential business risks, which means few businesses have a complete and company-wide tax strategy signed off by the board.
A specialist in HR and employment tax risk, she continued: “Employment tax is frequently overlooked within an organisation; you often find there is no one individual taking responsibility, with the result that there is a lack of control, process and ownership.
“This is even more important now, when HR directors are looking at new ways of retaining talent and rewarding people in a tough economy. It’s important to make sure rewards and benefits policies, such as shareholder equity schemes, are pulled together across a whole business and form part of an efficient and cohesive tax strategy.”
www.businessmag.co.uk
By reviewing and identifying an organisation’s corporate governance risks – even more complex for those operating in a global marketplace – the new HR tax risk assurance methodology enables companies to demonstrate that they are fully compliant.
... the Government has made it clear that it will continue to focus on tackling the avoidance of employment taxes ...
It comes at a time when companies are finding it more challenging to manage employment tax risk on their own, not least because of the increase in new rules and regulations, including the launch of pension auto-enrolment and the impact this is having on payroll operations.
An added bonus however, is that the approach can also help identify where efficiencies can be made.
“Some areas of tax will require better management procedures, but others can create an opportunity to review HR policies and improve tax efficiencies to reduce employment costs,” she said. “It’s not so much about what ‘you are doing wrong’, it is more about supporting and enhancing the processes to create a more efficient way of doing things.
“In today’s environment, businesses have to do more for less in order to balance budgets, often expanding into new territories and emerging markets. People costs are a significant proportion of corporate expenditure and it’s really important that by expanding their workforce they don’t compromise on risk.”
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2013
She says it’s increasingly common for HMRC to ask employers about their workforce strategy and worker profiles, gaining information on the make-up of both employed and non-employed workers, such as contractors, consultants or staff engaged via agencies.
At the same time, the Government has made it clear that it will continue to focus on tackling the avoidance of employment taxes, for example through its IR35 legislation, as well as looking at businesses whose procurement model of bringing in temporary workers from overseas may give them an advantage when it comes to paying tax or national insurance.
“The Government has committed to reducing the benefits bill and at the same time we’ve also seen a huge rise in the number of national minimum wage audits as they want to make sure that workers are being remunerated fairly,” she concluded.
“By working with clients, we can help them through the maze of regulations and help them make sure they meet their responsibilities.”
Details: Debra A De’Ath
01895-522035 or 07711-776129
debra.a.death@
uk.pwc.com www.pwc.co.uk
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