Insights

Know Your Customer (KYC)

Overview

HMRC has increased its focus on employment tax compliance by launching an initiative called “Know Your Customer” (KYC) as part of the wider tax business risk review process. The purpose of KYC is to assess employment tax risk for Large Business employers only - the 2,000 or so largest employers in the UK.

As part of the KYC initiative, all Large Business employers are being invited to attend a meeting to enable HMRC to establish a clear and consistent understanding of how they manage their employer compliance obligations. HMRC will then use that information to help inform its overall risk rating for that business.

The key facts

  • HMRC will use KYC to establish a picture of the business and the level of employer compliance around key issues such as cross border movement of staff, approach to employee reward, the use of consultants, payments to directors and the interaction between internal teams.
  • In many cases the initial meeting will lead to requests for further information around written policies and processes on particular areas
  • There is a clear overlap between KYC and the Senior Accounting Officer (SAO) process around demonstrating that appropriate arrangements are in place to meet employment tax compliance obligations.
  • There is an expectation that appropriate individuals within the organisation will attend the KYC meeting which may include representatives from HR/reward as well as tax and finance.

Our advice

  • Be prepared. In our experience, KYC meetings tend to run more smoothly when the business has invested the time in understanding what is involved in KYC and preparing appropriate attendees in advance. Our team have considerable experience of helping businesses with both pre KYC meeting preparation, approach to the meeting itself and post meeting follow up.

Case Study

Company overview: A multinational Corporation specialising in engineering.

Objectives: To provide a clear understanding of the KYC process in advance of the meeting with HMRC and to provide post meeting follow up.

How we helped: We hosted a pre KYC workshop with the business to talk through the likely agenda items with appropriate stakeholders from tax, HR and reward including allocating responsibilities and dealing with areas of concern. Following the KYC meeting we worked with the client to provide responses to specific queries.

Benefits/ Outcome: As a result of the advance preparation the business fed back that they were far better able to manage queries raised by HMRC and the request for additional information post the KYC meeting was minimised.

Know Your Customer Services

HMRC has increased its focus on employment tax compliance by launching an initiative called “Know Your Customer” (KYC) as part of the wider tax business risk review process. The purpose of KYC is to assess employment tax risk for Large Business employers only - the 2,000 or so largest employers in the UK.  As part of the KYC initiative, all Large Business employers are being invited to attend a meeting to enable HMRC to establish a clear and consistent understanding of how they manage their employer compliance obligations.  HMRC will then use that information to help inform its overall risk rating for that business.  KYC meetings are most effective when the business has invested the time in understanding what is involved in KYC and preparing appropriate attendees in advance.  We have considerable experience of working with businesses to help them understand the KYC process, adequately prepare for the KYC meeting itself and to respond to post meeting follow up.

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