I have a hypothetical question tonight. If someone made errors in their payroll for example paying employees more than they put through the payroll system, paid employees without having them on the payroll system etc. Blatant stuff, not simple good faith errors.
Does anyone have any idea of the likely penalties? Has anyone had any experience of this?
It's fraud and tax evasion, which can carry a custodial sentence. I've experienced one of them and had to quickly cover my back to prevent implication.
I understand that one, I had hoped that by making full disclosure and paying any penalties this hypothetical business could avoid things like custodial sentences, but I realise that's a risk.
Can you tell me a bit about your situation and what you did? Just briefly.
I remember reading your post Steve. From memory wasn't something like they upped the wages so the guy could get a mortgage, and then they produced fake payslips of the PC?
I haven't got direct experience of the newish penalties but to a large extent it would depend on whether an Inspector discovered the error or it was volunteered, say on your advice. After that, it would depend on the quality of the disclosure made.
If 5 employees were volunteered and it was subsequently discovered through the Unemployment Benefit Office that a further 5 employees still had not been declared then maximum 100% penalties are likely to apply. There'd be no mitigating circumstances as the employer was patently aware of his further deception.
This link gives the range of penalties and the leeway the Revenue Officer has is to assess the maximum and let the employer oe adviser argue the toss.
Concealment would have taken place if the employer had booked down wages as purchases or other overhead, for instance. As yours appear to be deliberate but not concealed, the range is 35 - 70% of the tax due, but that might not stop HMRC from going for 100. Tim
I understand that one, I had hoped that by making full disclosure and paying any penalties this hypothetical business could avoid things like custodial sentences, but I realise that's a risk.
Can you tell me a bit about your situation and what you did? Just briefly.
Thanks
Kris
As Amanda says it was all about faking wages, bumping up earnings and faking the paperwork to show this, the advice I received was to spill the beans to save my self from being implicated should anyone find out which they were very likely to, so I did, although it hasn't been followed up as yet.
Looks like my 'hypothetical' company will be fine. Spoke to HMRC and they said it's not as bad as I thought. They think the chances of any big fines are very slim. Guess we just need to go through full disclosure now. Actually I think I spoke to the most helpful person at HMRC.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Apparently there is a secret number known only by the few. The Grand Vizier changes it once every full moon, I have yet to find this number even after scouring the HMRC website several times, all I know is you have to be an agent
They said to resubmit the year end returns for any alterations and issue the employees a new p60. She spoke about fines but said from her point of view (although it'll be a collector making the decisions) it sounded like incompetence rather than fraudulent (both myself and the accountant agree), and because there has been no attempt to conceal it and we have declared it we should be ok, perhaps a 30% penalty.
She was certainly helpful with how to complete the altered returns which is great because I've never done them before.
Good stuff. He came to them so it can only be incompetence and who would issue incorrect P60's if determined to cover their tracks.
I'd be interested if they impose late payment or other penalties. Seen as they are being nice, try exceptional circumstances to reduce the inaccuracy one :o)
