PAYE Settlements - agreement not in place

PAYE Settlements - agreement not in place

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A company has had a PAYE settlement agreeement in force for a number of years.

For 2010/11 the formal agreement has not been signed and returned.

The calculations were done in the usual way and now a letter has been received from HMRC hinting that, because the form was not in place, the entries should go through for PAYE and attract Class 1A NIC.  As far as I can see there will be no difference to the liability as calculated.

However, there is concern about the possibility of interest and penalties.

I have also heard mention that the benefits should have been on a P11D - can't see that myself since surely the benefit going through for PAYE/Class 1A NIC would preclude the necessity for a P11D.

Many thanks to any who reply.

Ian

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By glynisbm
08th Sep 2011 11:25

PSA

A PSA requires annual completion of a contract in order to be valid.

If it is not submitted by the filing date, then HMRC may either issue a Reg.110 assessment to collect the tax and Class 1b NIC or withdraw the PSA so that the items become liable for tax/NI as normal.

A P11D would be appropriate if the items are now not included in the PSA to account for any tax due (the amount on the P11D - the cash equivalent - gets included in the PAYE code/SA return)

The NIC due would depend on the nature of the item; Class 1a NIC for an employer provided benefit or Class 1 NIC for pecuniary liability which would be collected  and accounted for through payroll at the time the benefit was paid. 

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