To what extent is it legal - quite apart from advisable - for a payroll outsourcer to remit income tax deductions to HMRC on behalf of their client? The client will still be responsible for PAYE errors, but are they obliged to remit PAYE themselves - from their bank account - or do the Revenue take the view that providing they receive the deductions under a valid tax reference for the outsourcer's client then that's fine?
PLEASE NOTE : this is an enquiry on behalf of a client - it is not an invitation to be swamped by sales enquiries from payroll providers. Thanks
Thanks in advance
Mark Woolley
Mark Woolley
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Replies (3)
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Thanks
Andy : agreed. This is an arms length agreement between the client and a payroll provider, not me or my firm.
Peter : that confirms what I thought.
Many thanks gentlemen
Income Tax Payments
Mark,
The payment of Payroll liability is the ultimate responsibility of the Employer, i.e the PAYE Reference owner. The fact that another actually makes the payments to HMRC is acceptable BUT at all times the "Employer" is solely responsible for any errors or penalties in respect of the operation of PAYE.
The fact that the payment on behalf of the Client is drawn on a different Bank Account does not matter, as long as it is made with the valid PAYE Tax Reference and Accounts Office Reference.
One would naturally assume that there was a clear and perhaps formal agreement between the Outsourcer and the Client, since it would not be a comfortable situation for the Outsourcer to recoup any outstanding monies due from the Client, by reducing or failing to make payment to HMRC on a future Payroll Cycle.
Hope this helps?
Peter
Are clients comfortable with this?
It looks an obvious opportunity for fraud, doesn't it? Client hands over the monthly PAYE cheque to accountant. Accountant pockets same and doesn't pay HMRC. Haven't we all read about an accountant being banged up for this?
As an accountant I would want to remain beyond suspicion and so would never enter into such an agreement with a client.