Tax Year End Procedure Essay Example | Topics and Well Written Essays - 2000 words

Tax Year End Procedure - Essay Example Inland Revenue and HM Revenue and Customs legislation. The company payroll is one of the largest expenses a company may have and as such it is important that accurate and complete records should be kept on a daily basis to ensure that the year-end procedures can be carried out with the minimum of stress or inconvenience to payroll staff. This report addresses five different areas where payroll procedures need to be explained so that during the end of year cut-off and rollover procedures there is a minimum of adjustment that might need to be made to existing daily records. The five areas contained in this report include the reconciliation process, the clear-down process, submission requirements and deadlines, a general checklist and a review of procedures. The most helpful source of information on day-to-day payroll procedures is an Employer's Help Book (E13, 2005) that is published by the Inland Revenue Department. This booklet explains how to work out and record PAYE and NIC's (form P11); The procedures necessary when a new person is employed; what procedures should take place when an employee leaves the company; the correct procedure for changing an employee's tax code within a tax year as well as information on other different changes that might occur within a tax year such as changes in employees circumstances (reaching the age of 16, pension schemes, what to do if an employee dies and changes to insurance schemes) as well as comprehensive information on how to apply the Working Tax Credit to wages and how a company can take out Student Loan Deductions from an employee's weekly wage entitlement. One of the most important payroll procedures is the allocation of a new employees tax code, as this code will determine how much tax this person should be paying in accordance with his or her personal circumstances. There are a variety of codes that can be used which are generally noted with a letter (L, P, T, or Y) and one or more numbers. The Inland Revenue Department has more detailed information on how these codes should be allocated and they advise that a tax code for an employee should never be changed within a financial year without approval from the department. There are a number of different wage figures that have to be accumulated throughout any financial year. These include individual PAYE and gross earning figures for each employee, plus the amount of money that has been added to or deducted from individual pay entitlements for insurance and pension schemes, clothing allowances, travel allowances, working tax credit and other benefits and allowances. It is the company's responsibility to ensure that the calculations of weekly pay amounts and the recording of accumulative pay figures throughout the year are accurate especially in terms of PAYE as it is this amount that the company will need to pay to the Inland Revenue department at the end of the financial year. Most payrolls are now completed using a payroll software program. These programs have inbuilt processes in them that ensure that the necessary total figures are accumulated on a monthly and yearly basis. Supervisory checks at this stage of payroll processing should include checking weekly wage totals on a weekly basis before payments are made to employees, reconciling the weekly pay figure totals with those