I run a small accountancy practice, with the vast majority of my clients being sole director consultancy businesses with no additional employees, thus making them exempt from auto enrolment. Some of my clients do not pay themselves a salary at all and therefore no PAYE scheme is in place. I have two issues:
1) Client A - engaged an employee in the business in February 2019. The employee is under 22 and earns under £833 per month. He left employment in July 2019. The only other person on the payroll is the sole director of the company, who earns £719 per month.
2) Client B - engaged an employee in the business in September 2018. The employee is also under 22 and earns under £833 per month. The director does not pay himself a salary, so the PAYE scheme was set up specifically for the new employee.
I had assumed that because the employees did not meet the criteria to be put into a pension scheme, no further action would be necessary. However, I am now doubting myself, and on review of the pension regulator website, I believe that my clients did need to carry out auto enrolment duties - certainly each of them writing to the employee in question to tell him he would not be put into a scheme, but that he could join a scheme if he wished. Client A would, presumably, have had to send himself a similar letter (although over the age of 22 he earns £719 per month so still not required to be auto-enrolled). It appears a Declaration of Compliance may also have been required.
Obviously I intend to query with the clients whether they have had any correspondence with the Pensions Regulator since taking on the new employees, but I fully expect them to say no.
My question is - how would you approach these issues? In the case of Client A, the employee has now left, and so presumably the client is now exempt again from auto-enrolment. I am not sure what the implications of this are with regard to sending the required correspondence to the employee who is no longer employed / carrying out a declaration of compliance for an employer who is now exempt from auto-enrolment duties.
In the case of Client B, if it turns out that no action has been taken, presumably my client can now write to his employee and complete the declaration of compliance - but what are the penalties for doing this late likely to be?
In both cases, I do not expect the employees (both students) to have actually taken up the offer of them making their own contributions to a pension scheme.
Although the responsibility for compliance with auto enrolment lies with my client, and I am not contracted to carry out auto enrolment duties on their behalf, I do feel that I should have made them aware of these issues at an earlier date. What would others do in this situation? Should I offer to pay any penalties as I did not spot what needed doing in time? As a sole practitioner, it's helpful to have others to bounce ideas off when things go wrong and I very much appreciate any replies to my query, the worry of which is keeping me awake at night!