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Closing PAYE Schemes

Closing PAYE Schemes

Can someone tell me where I am going wrong?

Company directors pay themselves a salary of £624.00 per month by standing order. The amount puts them just below the point at which their company has to pay Class 1 employers contributions. There must be tens of thousands of such cases.

No payments are due to HMRC and we do a P60/P35 each year.

This is not a question about RTI.

We have been receiving letters from HMRC saying that there is no indication that we are operating PAYE and therefore they are going to close the scheme.

Further enquiry shows that they send this letter if no money is being received by Accounts office.

But we ARE operating PAYE, it’s just there are no deductions.

We have an annual payments flag set by Accounts office. Had this flag not been set, we would have been receiving reminders for payments.

The lady at HMRC this morning said that annual payment schemes are rare these days. Why is this?

Of course, when you phone, they have their stock answers and do not understand how things work in practice. No-one at HMRC seems able or willing to flag up the fact that potentially something is going wrong which is so frustrating.

I've had 11 of these this week.

Has anyone else experienced this and how have you deal with it?

Or is it me!

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avatar
23rd Nov 2012 09:57

One so far

We had our first this week, for a genuinely dormant company. I hadn't realised they were basing it on non-payment, despite P35s going in! I'd assumed they'd just be sifting out the annual nil return cases.

We're all familiar with the CT people not talking to PAYE, not talking to Debt Management. If the PAYE Accounts and Tax offices aren't even communicating ...!

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Hundreds.

We have had to review every single clients needs because of HMRC changing the way their system operates.

I would suggest though, in your case, you arent operating PAYE, you are just paying wages that dont attract PAYE or NIC so in this case you dont need a PAYE scheme!

HMRC dont really care as long as there is no tax or NIC due. I worked for HMRC in the Employer Helpline before moving and this was the understanding throughout HMRC, although I understand what you are saying in the fact you are paying out wages and want to hit above the LEL but not above the ET so as to have a pension credit but not attract tax or NIC.

HMRC wont credit your clients NIC records unless you are doing a P35 (No P60 because there is no tax due) but there should be P11's.

Annual schemes are not rare at all. Never have been, HMRC know about low salary high dividends, its not rocket science, they just cant do anything about it.

Cheers.

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By appacc
23rd Nov 2012 12:39

Thanks Liam

I see what you are saying but these cases must be very common and you DO need a PAYE scheme to do a P35 which we will do for 2012-13. Then we need to do RTI next year for the same reason. We cannot forgo the NIC credit. And a director has to report his employment earnings on his SA return.

So would you able to tell us all what you did with the hundreds of letters and what action was needed as a result of your review? That would be much appreciated.

Trevor

 

 

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By occca
24th Nov 2012 08:34

We complete these

http://www.hmrc.gov.uk/tools/payinghmrc/no-monthly-payment.htm

every quarter for all our clients in this situation

 

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