Case Study - Payroll Health Check

Scene Setting 

A firm of solicitors commissioned a Pay as You Earn (PAYE) Health Check following the departure of its established payroll team. With a newly appointed and relatively inexperienced payroll function in place, the partners were concerned about compliance risk and reputational exposure. 

The Action 

We conducted a detailed review of PAYE processes, controls, and outputs. The new payroll team demonstrated a strong commitment but limited technical experience. Two key issues emerged. 

Firstly, payroll processes relied heavily on manual intervention, increasing the risk of error. Our consultanct provided guidance on where automation could improve both efficiency and accuracy. More significantly, the review identified non-compliance in the treatment of expenses, benefits, and statutory payments, with potential implications for income tax and National Insurance liabilities for both employer and employees. 

Given the complexity of the issues and uncertainty over how far back they extended, we recommended urgent investigation and voluntary disclosure to HM Revenue and Customs (HMRC) to mitigate potential penalties. 

The Results 

The review provided the partners with clear visibility of compliance risks and a practical route to remediation. We left the firm well equipped with the necessary guidance to regularise its PAYE position and protect its professional reputation.