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No PAYE scheme

We recently took on a long established shop as a client.  The business is unincorporated and has one part-time employee.

For the last few years this employee has been paid weekly at a level between the LEL and the ST/PT so no PAYE has ever been due to HMRC.

We now find that no PAYE scheme has ever been operated so the employee has no contributions record.

There is no loss of tax to HMRC but what size penalties will be levied if the client files P14/P35s for the missing years?

Does anyone have recent experience of this type of problem?


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A little experience from client anecdotes

I spoke recently to a new client who was bringing their payroll reporting back up to date after years of delinquency. I think their situation was worse because they actually owed HMRC PAYE and NI too.

I didn't divine the exact scale of the fines, but it sounded as if HMRC were exacting the £100/month late for each year's P35. So the fines were absolutely enormous on the face of it.

By concession fines for each year are capped at the larger of £100 and the amount of PAYE/NI owing on April 19th (zero in your case), so in theory the fine might be limited to £100 for each P35, but I believe that the concession may not apply where the P35 is very overdue (ie years)

The concession is near the bottom of this page from the HMRC staff guidance:

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