I have just acquired a new client and it appears that instead of being registered as self employed (from Nov 2013) he was registered for PAYE by the previous accountant. There is no other employee in the business and he operates as a sole trader and not a limited company.
Why was he registered for PAYE in the first place is beyond me! How could any accountant make this mistake - they've been charging my new client a quite considerable amount of money each month for this service and he, not knowing any difference, has relied entirely upon the advices given to him.
Every month he was asked what he drew from the business and then this was processed through a payroll system and he has been paying PAYE/NIC every month on this basis.
I have now registered him for self assessment - from Nov 2013 - and have written to the PAYE section of the Revenue explaining the problem. When his UTR is issued I'll be writing to the SA section explaining the problem and giving copies of the letter to the PAYE section.
On the draft accounts he was not due to pay any tax of any form as his profits are below the personal allowance threshold taking into account losses made in the opening period of accounts.
Is there anything else I can do at the moment? I have sent in the September 2015 RTI info showing no wages to my client so the current year is not so much of a problem, just the 2014 and 2015 tax years.
Replies (10)
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Spoke to previous accountants
Have you contacted the previous accountants and asked them why they've registered him for PAYE?
mistakes
This is such an odd mistake I cant help wondering if a ltd company was formed and not operated.
Is the paye scheme in an individual or business name .
Poor you cannot imagine that this will be only mistake .good luck with it .
I'm afraid
You just have to unravel this as best you can!
Sort out the PAYE situation and submit the self-employed accounts and SA.
Problem is, if they take forever to sort out the PAYE problem (which they almost certainly will) the SA bill will be due for payment and the client may not have the cash to fund that bill!
Are the previous accountants members of a professional body?
Type of work?
What type of work does your client do? I can't imagine why an accountancy practice would set something like this up because its wrong on so many levels. Just asking a client what he drew each month should have rung alarm bells for them because as you've pointed out drawings don't equate to taxable profits. Like Tosie says it sound like the accountant was treating him as if he had a limited company. I've never come across anything like it let us know if you find out why this scheme was operated.
That is all a right pig's ear
you and the client really really need answers from the previous agent before you can progress any of this, given the lack of response ....
dictate your questions, place in client hand and send him to the previous agent's shop
he sits there until you receive answers. Give him two smart phones also
I just love a covert operation sometimes . Backstreet boys cant hide forever- hope they have pl insurance !