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Recovery of SMP

Recovery of SMP

Hi there,

my question is regarding recovery of Statutory Maternity Pay and the 3% compensation for National Insurance contributions.

The amount for SMP is £139.57 per week as calculated by the HMRC calculator, Payment have started from November 2015- the employer is Ltd in the construction industry. I haven't yet filled EPS, where I should put the CIS deductions suffered and the amount of SMP I want to recover. I am not sure what amount of SMP to claim back- the company is small- only 2 employees and qualify for 100% of the amount, but what about  the compensations for NIC - I know that it should be 3%, but if no NIC are paid for the SMP I suppose that I should claim only 100% of the SMP.

If I claim these 3% compensation I don't know how to account for it- I should debit National Insurance compensation account and credit Employer National Insurance account, but if I have not debited Employer National Insurance first ( because there are no National Insurance contributions) what should I do?

If someone could help me with this problem, please respond to me.

Thank you 

Replies

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01st Mar 2016 05:55

Don't understand

Why should you not claim compensation just because you are not paying NIC to HMRC?

Why should you debit compensation if it is in the company's favour?

 

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01st Mar 2016 07:13

Software

And where you should put these entries depends on the software you're using.

Which you don't mention .

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By ell
01st Mar 2016 17:02

SMP

Hi and thank you for your reply.

I use SAGE and the problem is that I haven't got any entries on 7006- Employer NI.

I think that the entries should be as follows:

1. Dr 7000 Gross SMP  Cr 1200 Bank Account- with the amount of SMP paid 

2. Dr 2211 National Insurance Cr 7000 Gross SMP- with the same amount that has been paid -and Dr 2211 National Insurance Cr 7006 Employer NI with these 3% compensation

And I'll have 7006 Employer NI with credit balance, because no other entries have been made.

Please advise me on how should I proceed- may be there is another way?

Thank you!

 

 

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01st Mar 2016 17:10

Just to be clear .....

So you're doing the accounts and not filing your RTI online at HMRC ?

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By ell
01st Mar 2016 17:57

Hi,

I am sending FPS every month with the salaries and from November SMP to the one of the two employees, but I haven't sent yet EPS- because no payments are due to HMRC- salaries are set to £672 per month - there are CIS deductions as well and I am going to put them together with the amounts of SMP I want to claim back in the EPS report to HMRC.

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01st Mar 2016 21:27

Funding

Well, that didn't really answer the question.  I've no idea why you're giving a narrative of you Sage nominal codes.  Perhaps you'd like to say ......

But from an RTI/PAYE/SMP point of view, you clearly need to be making an application for funding.

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By ell
02nd Mar 2016 12:15

Hi, 

Hi, 

thank you for your advice- I'll try to apply on-line for funding.I understand that I am not clear enough with my explanations, but I realised that these 3% compensations are not money going into the bank account, but rather reduction of the employer's expenses for NI contributions, if the employer has incurred any.

And this conclusion answers my question.

If you have time, please comment - Do you agree with me?

 

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01st Mar 2016 23:06

Claim advanced funding.
You would be quicker claiming advance funding for the SMP. Google advance funding, your sage software will give you the figures to populate the online funding email form from HMRC website and you will get the money in a few weeks

Seems foolish to wait to the end of the tax year to claim it when it looks like you can qualify to receive the funding immediately.

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By ell
02nd Mar 2016 12:21

Hi, thanks for your advice- I was not sure whether to claim these 3% compensations, but it actually doesn't matter because the employer doesn't have any expenses for NI contributions- so it is irrelevant to claim these 3%.

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By ell
02nd Mar 2016 14:18

SMP

Hi,

I saw the claim form for advanced funding- it seems that these 3% compensation is real money to be paid- so my question remains- how to account for these- I mean these 3% compensation is staying in the company's bank account- there is a difference between what I claim SMP+3% and what has been paid to the employee- SMP only. I have to Cr 7006- Employer NI with the amount of these 3% and I will have this account with a credit Balance- is this right or no?

 

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02nd Mar 2016 19:31

Yes - you get 3% compensation - that's what everyone has said !

Ultimately, it reduces wages.  Which Sage code you post it to is up to you.

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By ell
03rd Mar 2016 11:43

SMP

Hi,

thank you for getting back to me- I got to this conclusion as well - it was difficult for me because I've got no experience dealing with National Insurance accounts and I couldn't  imagine expense account - Employer National Insurance- with a Credit Balance- but I realised that I could post these compensations to another account and reduce the amount of Wages.

Thank you!

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03rd Mar 2016 13:35

Journal

You are not making the entries the most sensible way.

Every time you run your payroll you should record a journal taking everything into account. This is better than recording when payments or receipts happen.

You don't get the 3% compensation separately.

If you claim for advance funding you will get in an even bigger mess! HMRC don't understand what to do when the advance funder spans two tax years.

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