Hi
I have a client whose employee was paid at the lower earning limit for NI and who was therefore paid SMP by the client. No PAYE scheme was ever in place - client didn't think they needed one as no PAYE or NI due. Now they're asking me how to get the SMP back from HMRC. This is all last tax year.
I spoke to HMRC who were astoundingly unhelpful. They kept repeating "there would have been a PAYE scheme" I kept replying "yes, but there wasn't". When they finally got it, they just said we needed to register and apply for advance funding. Repeated several times that the SMP had already been paid, got them to understand, then they said OK, you need to apply for advance funding. I gave up at that point.
I will register the client for a PAYE scheme and I had in mind that there was a form to reclaim SMP retrospectively - can anyone remember this? Alternative I suppose is to do an 09/10 P35, but I don't know what the penalties will be for doing it now.
Any suggestions would be welcomed.
Thanks
Julie
Replies (4)
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Yes there is a form
Hi - We had a similar situation last year (sole director with no PAYE to pay over but a £700 SMP refund to claim) only we did have a PAYE scheme. All we did was contact the PAYE office who sent us the form (simple A4 no code to reference it) which has to go back with a copy of the Doctor's sick note.
This we did in May phoned, wrote, screamed and got agreement in August with "cheque on its way" still not arrived.
I should take it in easy stages, ie set up the scheme first, I'm not sure if there's a penalty as no PAYE to pay over. Complete P35 then call/write for "reimbursement of SSP" form.
There is something odd about this
A client who knows exactly what the NI LEL is and about paying SMP, but does not know that they need a PAYE scheme? Who was advising them?
Why was the employee paid at the NI LEL? Presumably, in order to claim a qualifying year for state pension purposes at the least possible cost, but without a PAYE scheme, no forms P35 & P14 could have been submitted to HMRC in order to establish the qualifying year, so the exercise was pointless.
The NI LEL in 2009/10 was £95 a week. Employees must be paid at least the NMW which went up to £5.80 in October 2009. I trust that the employee worked no more than 16.4 hours a week or the client could be in trouble.
Did the client know enough to calculate the SMP correctly? It should not have been the standard £123.06 a week, but the lower figure of £85.50, being 90% of earnings.
However, I agree with Paul. Register for a PAYE scheme now and file a 2009/10 P35 online (you do not need agent authorisation). Not only will it establish the employee's qualifying year, but it is the way of establishing that a PAYE refund of 104.5% of the SMP paid is due. You will need to write a letter to claim the refund. Don't hold your breath - someone at Lothians PAYE district told me last week that they were only opening post from August. The maximum penalty would be £600, but I doubt they will charge anything.
Euan - a bit cross
Like mine you sound like your day's been a bit fraught?
I'm glad to hear they are just dealing with August, that should make my client a happy bunny and will please me more than it should as it's my wife!