PAYE in change of limited company

PAYE in change of limited company

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Hi all,

Would like some help with regard to the transfer of a PAYE scheme from one limited company to another...here is the scenario...

The staff are under contract of employment with limited company A and have always been paid by this company. At the beginning of the year (for month 1 payroll), the staff are paid by a new limited company B. Both companies are owned by the same people and the staff have continued in what they believe the same employment with no changes to terms.

What are the implications of this with regard to the employees terms and conditions of employment? Presumably being paid by a different limited company can affect your length of service entitlements etc? Should new terms have legally be issued by the employer? 

Presumably the old limited company will need to transfer the scheme to the new limited company and settle any outstanding liabilities?

Hope someone can help even if these questions may be more legal than accounts based!!

Thanks,

James

Replies (6)

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By johngroganjga
02nd May 2013 15:38

Employees need to know about the change, and need new contracts of employment.  Suspect TUPE will prevent employer changing terms and conditions even if he wanted to.  New contracts will almost certainly need to say that previous service with other company shall be treated a continuous.

To be honest I am not sure whether you can transfer PAYE scheme or whether you have to close old one and open new one.  Not sure that it makes much difference either way.    

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By Euan MacLennan
02nd May 2013 16:11

PAYE scheme succession

Company B must have a new PAYE scheme with a new PAYE reference.  However, the rules on succession set out in PAYE30045 mean that Company A does not have to issue forms P45 and that HMRC will simply move all the employees over from Company A's PAYE scheme to Company B's.  As the transfer has occurred at the end of the tax year, it will be simpler if Company A issues the 2012/13 forms P60 and files the forms P35 & P14.

In practice, you carry forward the employee details (including the original date of starting) on the same payroll, but just change the employer name and the PAYE references for 2013/14.

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By Democratus
02nd May 2013 16:19

Can you confirm what you mean by "At the beginning of the year (for month 1 payroll), the staff are paid by a new limited company B."?

Are they payrolled by B or merely had their wages paid by B on behalf of A? The former would look like a TUPE to me the latter perhaps a related party transaction between A & B and the employees continue to be employed by A.

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By James McRae
02nd May 2013 16:29

Thanks guys.

As far as I am aware, there will be a new PAYE scheme and new PAYE reference as suggested by Euan above. This was in place for the beginning of the new financial year.

Is it feasible to be payrolled by limited company B while being employed by (the original) limited company A?! Presumably in this case there is no change to the emploees terms and conditions?

Thanks,

James 

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By johngroganjga
02nd May 2013 16:47

You can't be payrolled by one company and employed by another.  You can however be seconded by the company that employs (and pays) you to another company that has work for you to do, which will pay your employer for the services you provide to it.

 

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By James McRae
03rd May 2013 11:07

Many thanks guys

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