Paye procedures for CVA

Paye procedures for CVA

Didn't find your answer?

We have a client who has gone through the CVA process in February.  The company payroll was processed up to month 12 and EOY done - however we have now received from HMRC a new of PAYE ref due to the CVA.  Our payroll software provider advised that we should enter leaving dates as the CVA date on the old ref to produce a P45 for all e'ees then set up a new company using the new PAYE ref's before adding all e'ees using the P45 details and continue processing - this was fine for all employee's except the 2 director's NI figures which are being produced as if they are new director's in a new company.  What we need to know is: 1) should p45's be prepared? (although won't be given to e'ees) 2) should the figures at the end of the old period be in as b/f figures? 3) do we just have to accept the new director's NI figures?  (Our software provider doesn't have the answer and neither does anyone at HMRC!).  All comments welcome, thanks!

Replies (1)

Please login or register to join the discussion.

Stepurhan
By stepurhan
25th Apr 2014 13:00

What is the NIC issue?

If you are making steady payments to the directors then the non-cumulative NIC is not an issue. It is only a problem if you are making variable payments that need the cumulative arrangements to smooth the NIC payable.

Employees are effectively leaving one scheme and entering another, so P45s are appropriate. It just so happens that it is with the same company. Think of it as similar to an employee leaving but then coming back. You have recorded their departure so you need to treat them as a new employee again. However, as they are entering a new scheme, B/F details are previous employment figures exactly as if they had changed jobs. Possibly including them as payments in this employment is what is giving you the NIC problem.

You need to ensure that the original start dates for employees are kept on file. They still have continuous employment from the previous scheme and keeping the original start affects statutory rights. Whilst they are treated as changing jobs in many ways, this is one aspect that is unaffected by that.

Thanks (0)