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3 years payroll no scheme in place - penalties?

3 years payroll no scheme in place

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Taken on a client who's previous Accountant hasn't filed PAYE for last 3 years (or even set a scheme up).

1 Employee, earnings are

2015-16 £6131.90

2016-17 £8896.93

2017-18 £8500.00

2018 to date £8478

Client wants to come clean, set payroll up and submit prior year figures (which I will do via EYU). Tax lost is nil, NI very small so late payment not really an issue but I'm concerned about late filing penalties.

Anyone have any experience of this with regard to the penalties which will be levied when submitting a full year via EYU and help me with an estimate as to what he should expect?


Replies (13)

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By lionofludesch
22nd Nov 2018 15:13

No - but good luck with it.

Potentially, he's got forty or so £100 penalties.

Thanks (2)
By Glenn Martin
22nd Nov 2018 15:24

I would just file them, It would not suprise me if they did not even bother issuing penalties if they are filed as an EYU as they assume that the original submissions were done on time and they are just amending them.

Was the scheme set up but just nothing filed? as they usually close them down if nothing is filed within a few months.

Thanks (3)
Replying to Glennzy:
By lionofludesch
22nd Nov 2018 15:37

You're probably right.

HMRC are involved in a "wide and significant engagement with small businesses" about MTD. They're too busy to notice late RTI submissions.

Thanks (1)
By RedFive
22nd Nov 2018 15:35

Thanks guys - no scheme set up. Previous Accountant said he didn't do payroll (!) so the guy just stuck his head in the sand.

He is a very busy domestic electrician so can't blame him for not being financially switched on to sort sooner.

He took it out of the sand when realising he would need to register for vat to which said 'Accountant' doesn't do either so arrived at my door.

I'm moving him to Limited company, new payroll, vat reg etc but we need to take care of this PAYE issue.

My calcs suggest £5k as per Lion which is why I wanted any real world examples as Glennzy says RTi is a joke anyway so might not even flag.

£5k is a big bet though so reluctant to take that gamble.

Thanks (0)
Replying to RedFive:
Tax Manager
By Dynamo1224
22nd Nov 2018 17:17

If you're moving him to a Ltd do you mean he is currently self employed?

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Replying to Dynamo1224:
By RedFive
22nd Nov 2018 17:23

Yes he is.

>>>>waits for trick question to see if I'm a real Accountant or not.......


I'll save you the trouble, the payroll is not for him :)

Thanks (0)
By SXGuy
23rd Nov 2018 08:17

Never had a penalty for late rti but never had 40 late ones so can't say.

So a previous year update, it will be fine.

Thanks (1)
By PBH64
23rd Nov 2018 10:10

Good luck filing for a year that predates the registration date or registering four years late. Both of those may fail and you'll have to factor in that this process may involve explaining yourself to a human who may refer you to compliance. I only hope that whoever it is for hasn't been claiming Universal Credit as this might be a bit of a shock when the employment hits DWP.

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By birdman
28th Nov 2018 09:52

Presumably you're sure the employee has no other employments or pension income etc?

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Replying to birdman:
By RedFive
28th Nov 2018 10:11

Yes, young apprentice.

Thanks (0)
By Andy Reeves
28th Nov 2018 11:03

If you know that the client has not met his obligations to HMRC (and particularly as there is a loss of revenue - NIC), then you must insist that he corrects the position regardless of the potential penalties. Either that or cease to act (and then possibly submit a money laundering report).

If you set up the payroll scheme now, and then phone HMRC once it is active to discuss, you may get someone tame at the other end who will agree to zero penalties.

Thanks (0)
Replying to Andy Reeves:
By RedFive
28th Nov 2018 12:37

Yes thanks Andy, the question was not about whether to report, but what were the implications penalty wise.

We have registered a PAYE scheme as of 2015 and received an email asking to confirm the date as 'penalties may be charged'

Thanks (1)
By sallyrichardson
28th Nov 2018 11:48


I had a director in this situation a couple of years ago. We postdated the PAYE scheme back to the previous year and were hit with large fines, but I appealed them and they were waived, as my client did not realise he needed a payroll and was "coming clean". He had no NI or tax to pay so I'm not sure if this was why they allowed the appeal. Hope this helps.

Thanks (3)
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