Authored by Dean Farthing Partner, Employment Taxes and IncentivesAuthored by Dean Farthing Partner, Employment Taxes and Incentives

Pippa Booth wrote recently about tax compliance as a product Post | LinkedIn. It's a framing we use across our work at Unity Advisory and it applies with particular force to employment taxes.Pippa Booth wrote recently about tax compliance as a product Post | LinkedIn. It's a framing we use across our work at Unity Advisory and it applies with particular force to employment taxes.

The design challenge starts upstream of the data, the calculation and the filing itself. It starts with a structural reality most mid-market, and PE-backed businesses have quietly accepted: employment tax responsibilities are split across HR, payroll, finance, legal and tax, with no single function holding the full picture.The design challenge starts upstream of the data, the calculation and the filing itself. It starts with a structural reality most mid-market, and PE-backed businesses have quietly accepted: employment tax responsibilities are split across HR, payroll, finance, legal and tax, with no single function holding the full picture.

Different functions hold different parts. HR administers the benefits, payroll runs the mechanics, and finance carries the cost on the P&L. In most of these businesses there is no dedicated employment tax specialist, and often no tax team at all. The PSA therefore ends up sitting wherever it landed historically, in finance, in payroll, in HR ops, depending on the business. No one function sees the full picture and no clear ownership of the full process.Different functions hold different parts. HR administers the benefits, payroll runs the mechanics, and finance carries the cost on the P&L. In most of these businesses there is no dedicated employment tax specialist, and often no tax team at all. The PSA therefore ends up sitting wherever it landed historically, in finance, in payroll, in HR ops, depending on the business. No one function sees the full picture and no clear ownership of the full process.

What looks like a process problem is, in practice, an ownership one. The moment HMRC asks a question, or an acquirer starts a people due diligence, the gap surfaces.What looks like a process problem is, in practice, an ownership one. The moment HMRC asks a question, or an acquirer starts a people due diligence, the gap surfaces.

Defining the productDefining the product

Applying Pippa Booth’s framing to PSA compliance: the product is not the annual calculation itself but everything behind it.Applying Pippa Booth’s framing to PSA compliance: the product is not the annual calculation itself but everything behind it.

A governed record of what was provided, to whom, and under what policy. Consistent treatment logic, agreed in advance, that distinguishes what is exempt, what belongs in a PSA, what should be reported via payroll (or until 2025/26 via Forms P11D), and what should not have been paid in the first place. An evidence trail built into the systems and approvals that precede the year-end, rather than assembled from inboxes post-April. And an accountability model that defines, clearly, who owns each part across HR, payroll, finance and tax.A governed record of what was provided, to whom, and under what policy. Consistent treatment logic, agreed in advance, that distinguishes what is exempt, what belongs in a PSA, what should be reported via payroll (or until 2025/26 via Forms P11D), and what should not have been paid in the first place. An evidence trail built into the systems and approvals that precede the year-end, rather than assembled from inboxes post-April. And an accountability model that defines, clearly, who owns each part across HR, payroll, finance and tax.

In most businesses this product gets rebuilt every year. It holds until HMRC looks more closely, until the workforce scales, until a new system goes in mid-year without tax in the room, or until a transaction exposes what was always fragile. The cost, in time, in tax, in deal friction, then surfaces all at once.In most businesses this product gets rebuilt every year. It holds until HMRC looks more closely, until the workforce scales, until a new system goes in mid-year without tax in the room, or until a transaction exposes what was always fragile. The cost, in time, in tax, in deal friction, then surfaces all at once.

What a product mindset changesWhat a product mindset changes

Applied to PSA compliance, that means:Applied to PSA compliance, that means:

• Agreeing the ownership model across functions: who captures what, who makes the treatment call, who holds the evidenceAgreeing the ownership model across functions: who captures what, who makes the treatment call, who holds the evidence

• Standardising categorisation logic so the same expenditure type is treated consistently year on year, with the rationale written downStandardising categorisation logic so the same expenditure type is treated consistently year on year, with the rationale written down

• Building approval workflows that capture the right detail at the point of spend, not six months laterBuilding approval workflows that capture the right detail at the point of spend, not six months later

• Measuring quality in ways that are meaningful: consistency of treatment year on year, the share of items included without a documented rationale, key person dependency in the calculation, and how quickly the organisation can respond to an HMRC information requestMeasuring quality in ways that are meaningful: consistency of treatment year on year, the share of items included without a documented rationale, key person dependency in the calculation, and how quickly the organisation can respond to an HMRC information request

None of this is a year-end fix but instead is a design choice. The value compounds year after year because the organisation retains what it has learned rather than starting over each year.None of this is a year-end fix but instead is a design choice. The value compounds year after year because the organisation retains what it has learned rather than starting over each year.

One more design challenge approachingOne more design challenge approaching

Mandatory payrolling of benefits in kind arrives in April 2027 and deserves its own treatment, which we'll cover separately. The short version: businesses approaching it as a system configuration task will find it creates fresh employment tax exposures quickly, and the same ownership logic applies.Mandatory payrolling of benefits in kind arrives in April 2027 and deserves its own treatment, which we'll cover separately. The short version: businesses approaching it as a system configuration task will find it creates fresh employment tax exposures quickly, and the same ownership logic applies.

The Unity perspectiveThe Unity perspective

Employment tax compliance should be designed as part of the finance and people operating model, rather than assigned by default to whichever function happens to have inherited it.Employment tax compliance should be designed as part of the finance and people operating model, rather than assigned by default to whichever function happens to have inherited it.

That involves three things: settling accountability across functions, building the evidence trail into the workflow rather than the year-end, and measuring quality and efficiency across the cycle.That involves three things: settling accountability across functions, building the evidence trail into the workflow rather than the year-end, and measuring quality and efficiency across the cycle.

If you're working through your PSA this year and the ownership picture isn't clear, get in touch. We can run a short diagnostic on where the gaps sit before they surface elsewhere.If you're working through your PSA this year and the ownership picture isn't clear, get in touch. We can run a short diagnostic on where the gaps sit before they surface elsewhere.

At Unity Advisory we have also built a solution that can help you deliver you PSA compliance this year. It combines rules-based automation with senior expert oversight to process transaction data consistently, produce a defensible audit trail, and free up internal teams from the mechanical burden of the annual review. The design question still comes first; we can help on both.At Unity Advisory we have also built a solution that can help you deliver you PSA compliance this year. It combines rules-based automation with senior expert oversight to process transaction data consistently, produce a defensible audit trail, and free up internal teams from the mechanical burden of the annual review. The design question still comes first; we can help on both.