RTI Annual Scheme

RTI Annual Scheme

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Can anyone advise the easiest way to register a clients PAYE scheme as an annual scheme with HMRC.  There doesn't appear to be anyway to do this online or when first registering the scheme.

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RLI
By lionofludesch
30th Dec 2014 13:10

Waste of Time

Don't bother. Just submit monthly.  Annual schemes have too many problems and anomalies.  If they didn't, there wouldn't be so many threads about them on here.

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By DKB-Sheffield
30th Dec 2014 13:18

Agree with lionofludesch

Simply set up a monthly scheme.

Assuming the only payment is to a director (and eligible for Director NI treatment) with a cumulative code (not W1M1), pay the entire salary in month 1 and file EPS returns for the other 11 months stating no payments have been made.

Clearly, the advice given here is different if the payroll starts mid-year so, change the figures accordingly.

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Euan's picture
By Euan MacLennan
30th Dec 2014 13:37

The only way

... is to call the Shipley Helpline on 0300 200 3401 as set out in the old HMRC guidance.

But unless your client's company really does only pay a salary to himself (and anyone else on the payroll) once a year, don't do it.  Yes - crediting the net pay to his DLA is deemed to be payment of salary, so you could do it at the start of the tax year and he could draw it down monthly during the year - but in that case, why not report it monthly? - and it only works if the DLA remains in credit throughout the year, including any charges to the DLA which you, as the accountant, might make months after the end of the company's financial year when you prepare the accounts.

And if you don't have an annual scheme, don't be tempted to file 12 monthly RTI reports in advance at the start of the tax year.

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Replying to davidbarry:
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By DKB-Sheffield
30th Dec 2014 13:50

Apologies for not being clear...

Euan MacLennan wrote:

And if you don't have an annual scheme, don't be tempted to file 12 monthly RTI reports in advance at the start of the tax year.

Sorry Euan, I should have been clearer in my guidance. I certainly wasn't advocating that the OP file the 11 Nil EPSs at the start of the year, more that they should be filed on a monthly basis.

I agree, it makes little sense to do this as filing a monthly return takes as much time as filing a zero EPS however, I also know that some clients (the ones who understand what their DLA is) prefer to see their salary going in at the start of the period so they know what money they have in there for the year. Besides, dumping a large salary into the DLA at the start of the year may also help the prior year CT as regards s455 wouldn't it?

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By TaxAngel
30th Dec 2014 17:29

I agree - monthly RTI is probably best

I agree with others.  It can be difficult to set up annual schemes, the rules are tightly-drawn and they are only suitable for payrolls where there is no chance at all of anyone else being paid.  Several schemes I set up as annual are no longer able to be because directors have paid their (student) children for work in holidays or given temporary work to friends' children. In the past this wasn't an issue if there was no tax or NI to pay but now an RTI return has to be made if there is anyone on the payroll, and if an annual payment is being made to director above LEL, this will be the case.

 

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By breakaway.barry
30th Dec 2014 17:30

Thanks for all the advice.  I was only considering the case where the client is a single director company with no other employees, the DLA more than covers the annual drawings and the director prefers to make one salary payment in March and one PAYE payment. It appears then that the only way is to call the helpline, I was just hoping that there was an online option

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Replying to 356B:
By petersaxton
31st Dec 2014 08:03

EPS

breakaway.barry wrote:

Thanks for all the advice.  I was only considering the case where the client is a single director company with no other employees, the DLA more than covers the annual drawings and the director prefers to make one salary payment in March and one PAYE payment. It appears then that the only way is to call the helpline, I was just hoping that there was an online option

So just do one EPS covering months 1 - 11 and an FPS for month 12. That's if your software allows it.

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Replying to atleastisoundknowledgable...:
RLI
By lionofludesch
31st Dec 2014 09:30

HMRC

petersaxton wrote:

breakaway.barry wrote:

Thanks for all the advice.  I was only considering the case where the client is a single director company with no other employees, the DLA more than covers the annual drawings and the director prefers to make one salary payment in March and one PAYE payment. It appears then that the only way is to call the helpline, I was just hoping that there was an online option

So just do one EPS covering months 1 - 11 and an FPS for month 12. That's if your software allows it.

It's not so much whether your software allows it, Peter, as whether HMRC will accept EPSs so far in advance.  Someone flagged that up as a problem on this forum about a month ago.

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RLI
By lionofludesch
30th Dec 2014 18:56

Good luck

It's a bold man who goes against all the advice.

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By petersaxton
31st Dec 2014 18:00

They do

I have submitted EPSs that far in advance. If it turns out wrong then you just submit an FPS and the EPS is ignored.

Sage payroll asks which months you want to submit EPSs for and it accepts whatever you say in the current tax year.

 

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RLI
By lionofludesch
01st Jan 2015 09:25

Nice to know

Good to hear from someone who's actually done it.

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By Kate Upcraft
02nd Jan 2015 13:58

since October you can set nil activity for 12 months

HMRC changed the validation on the EPS in October 2014 so you can do up to 12 months of 'nil activity' months in one  go (previously six) so just do that at the start of the year and send the FPS in month 12 and remember to set the 'final declaration marker' - the questions have been abolished now for 2014/15 so that's one less job to do. If you pay the one month's salary ahead of month 12 you must still remember to do a final declaration via the EPS after 6th March  

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By quadra
25th Jan 2015 13:47

Annual Schemes

I am a single director limited company. For years I have paid an annual fee only of £7500 each March to avoid PAYE administration. I already submit VAT returns, annual accounts, P11d's (P35's no longer thankfully) and have no more time to donate to the government or to waste on pointless admin.

I spend a lot of time travelling and do not have a monthly admin/accounting function.

I really (REALLY) want to avoid un-necessary admin, but I also really want to avoid RTI fines.(No further comment on these , other than Dick Turpin at least had the decency to wear a mask)

So, It seems I should register for annual filing, pay myself each March as before, and pay a dividend (if any) whenever, as there are no RTI implications for dividends.

The advice here appears to be that I should stay clear of annual schemes, but given the simplicity of the above, is that really the case?

And while we're at it, do I register for an annual PAYE scheme, or an annual RTI scheme, or both? An what on earth is the difference between an EPS and an FPS, or are they the same thing? (even HMRC web pages appear to use them as interchangeable). 

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RLI
By lionofludesch
25th Jan 2015 14:04

EPS and FPS

No, they're not the same thing.  They carry different information.  It's a shame that their acronyms are so similar as it's bound to cause confusion.

It's not as simple as this but broadly, an FPS contains information about payments made and an EPS carries other information, such as SMP claims and Employers Relief claims.

Personally, I don't think Annual Schemes are worth the bother.  But, as a traveler, they may suit you.  There are many threads on here about problems with Annual Schemes - browse through them and at least you'll go into them with your eyes open.

Not sure why you've gone for £7500 when £10000 is the generally accepted optimum salary but, either way, you need to submit RTI as you're paid over the £111 pw limit.  I think you already have a bit of a problem if you haven't registered for RTI, nearly two years in.

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By quadra
25th Jan 2015 17:26

thanks for this. 

thanks for this. 

I closed my paye scheme & paid only dividend in 2013/14 for that reason.

I'd like to re-open the scheme, but not if Mr Turpin is going to start throwing fines around, hence I need it easy to administer. 

I'm thinking as an alternative of closing the limited company and registering as self-employed instead.

 

I'll look up some of the threads you mention, but surely it shouldn't be this hard!

 

 

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By SoL
25th Jan 2015 17:33

Just saw this post on the "recents" list so wondered if anyone can help on a related query with the practical aspects of processing an Annual Scheme.

I have a new client who registered herself on an annual scheme back in April 2014 as she was happy to take one lump-sum amount of £10,000 in March 2015.

As this is now looming on the horizon, I've just set the company up on Moneysoft with a single payment in March 2015. However, it's nagging me about overdue RTI returns, and there doesn't seem to be any "annual scheme" flag that I can see.

From searching the previous threads, it appears that Moneysoft doesn't do "annual schemes", so does this mean I would have to use HMRC software?

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Replying to BSSRoberts:
RLI
By lionofludesch
26th Jan 2015 14:16

Dunno but

SoL wrote:

From searching the previous threads, it appears that Moneysoft doesn't do "annual schemes", so does this mean I would have to use HMRC software?

Dunno but does it matter much for one transaction a year ?

Yet again we have a query on Annual Schemes.  People complicating their lives to "save themselves time"...........

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By petersaxton
25th Jan 2015 17:38

quadra

It is madness to base your decisions on the chances of fines. It could cost you a lot of money by making the wrong decisions.

Get an accountant and ask their advice!

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Replying to djn24:
RLI
By lionofludesch
26th Jan 2015 14:23

Madness indeed

petersaxton wrote:

It is madness to base your decisions on the chances of fines. It could cost you a lot of money by making the wrong decisions.

Get an accountant and ask their advice!

Agree with this.

Quadra - You don't give enough details of your personal situation but you could already have thrown away your personal allowance for 2013/14 (worth nearly £2000, based on a 20% tax rate) just because you might get RTI penalties - which, in the event, haven't even started for companies of your size yet. Not to mention the new Employer's Relief - up to £2000, though you wouldn't benefit by the maximum.

Please - get some advice, for heaven's sake.

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Replying to Copycat:
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By quadra
26th Jan 2015 16:22

RTI

lionofludesch wrote:

petersaxton wrote:

It is madness to base your decisions on the chances of fines. It could cost you a lot of money by making the wrong decisions.

Get an accountant and ask their advice!

Agree with this.

Quadra - You don't give enough details of your personal situation but you could already have thrown away your personal allowance for 2013/14 (worth nearly £2000, based on a 20% tax rate) just because you might get RTI penalties - which, in the event, haven't even started for companies of your size yet. Not to mention the new Employer's Relief - up to £2000, though you wouldn't benefit by the maximum.

Please - get some advice, for heaven's sake.

 

Not so - I received a £1200 fine PLUS a £1200 penalty from Dick & Co in June 2014 (for 2013/14) for not sending a Nil RTI return, even though I had a very low turnover for the year and have always been a "small company". I got out of it by agreeing to close the PAYE scheme. Agree about the loss of the PA, but at 20% its lower than the fine! I'm afraid I've lost all confidence in HMRC, so I think making an (informed) decision based around minimising the opportunity for HMRC to levy fines is exactly the way to go!

For small one-man bands, wouldn't a switch to self-employment eradicate the issue?

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By petersaxton
25th Jan 2015 17:42

Annual scheme

If you have arranged an annual scheme with HMRC what will be the difference in only running a payroll in March 2015 with any software?

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RLI
By lionofludesch
26th Jan 2015 16:28

Fines AND Penalties ???

Not sure about that.

Still - if you'd filed your RTI you could have avoided the fines AND kept your personal allowance.

But as long as you're happy, why bother with an accountant ?  Just a pointless expense ....

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By quadra
26th Jan 2015 23:18

RTI

A bit hard to file it when you're not registered Doh!

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Replying to johngroganjga:
RLI
By lionofludesch
27th Jan 2015 09:48

Know all, know nowt

quadra wrote:

A bit hard to file it when you're not registered Doh!

Oh ?  And whose fault is that ?

You're too daft to know you're daft, quadra.

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Stepurhan
By stepurhan
27th Jan 2015 10:24

Avoiding fines

You know what the simplest way to avoid late filing fines is? Not filing late. There's plenty of good, cheap software that will handle it for you, so it's not exactly an onerous admin burden. Most accountants will deal with it for a nominal fee if it is too much to do yourself.

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