Payroll compliance and the VAT scam

Payroll compliance and the VAT scam

Forget robbing a bank or winning the lottery – set up a payroll company, charge contractors VAT on wages and make a million. Then to really seal the deal, go bust.

If that sounds too easy then it probably is, but that isn’t any consolation for the thousands of businesses that get caught up with dodgy suppliers every year.

Thankfully for most businesses it is generally only the taxman who loses on a financial level, although the associated costs of working with a shady payroll company can cause disruption to any organisation and also lead them open to potential action if certain rules and regulations haven’t been followed.

When HCRU – howcompliantRU.co.uk – set up to offer an alternative payment service based on compliance, they were horrified to discover the true extent of the industry’s reputation.

“If you want to be a thief then setting up a payroll company which doesn’t follow the rules can be easy and almost legal, if not ethical,” said Rob Wellard, Director. “It is just amazing how many payroll companies bend the HMRC rules when processing payroll.”

HCRU came across a number of challenges when initially setting up its business, because of the problems generated in the past.

“Getting insurance and banking has been difficult because of the regularity at which these rogue companies are going bankrupt.”

HCRU has now been set up to offer a service that complies with all regulations at all stages of the payroll process, whether dealing with CIS and non-CIS contracting, HMRC quarterly reporting and ensuring full compliance in the work place – including IR35 and immigration issues.

“We have designed the company to be a truly compliant solution but the irony is that because payroll companies have such a poor reputation for not following the spirit of the law themselves, we have come up against a fair bit of resistance,” said Rob.

Because the HRCU systems are fool proof in terms of keeping the business owner in charge of their processes, the issues have now been resolved, allowing it to offer a range of packages to ensure no business needs to fall foul of non-compliance.

Its tools cover the entire payment from start to finish, or can just include elements of the process to support the company’s own input.

“The dubious VAT charges have been big business for some short term operators who wanted to take the taxman’s money and then run.  It therefore pays to look at how your supplier of payroll services is set up, to make sure they can’t do the same thing. The risk of civil penalties can be high without a professional system that ensures there are no loopholes or potential downfalls.”

HCRU can provide full compliance packages which track the entire payment process, while still ensuring the business owner to be in full control at every step.  This means:

  • All payments are paid into a Business Client account
  • The website has a secure SSL key ensuring encrypted login security
  • All payments are digitally logged and tracked with full authorisation
  • No workers money can be accessed or paid without client consent
  • All payments are automatically tracked
  • Tax and other deductions are calculated to the penny
  • Each worker receives their CIS Payment and deduction statements and a private financial portal to view and track all payments which also allows them to track real time tax due, request help from a tax accountant and ask for assistance in processing annual accounts to HMRC.
  • Access to the system from any location on any device as it is all stored in the Cloud for security for easy access.

“We want to ensure we offer full accountability and transparency at all times and hopefully introduce some confidence into an industry that has otherwise been tarnished by poor practice.”

Further details are available from Rob Wellard on 07766 221418

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