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Can I backdate a payroll?

Can I register a client for PAYE as of April 2019 and run a retrospective payroll?

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I have recently taken on a client who is a sole director sole shareholder ltd company.  They have already passed their first year end (April 20) but no payroll has been set up.  Can I register them for PAYE as of April 19, when the company was incorporated, and run a retrospective payroll?  They would be paid below the secondary threshold so there would be no tax liability.  Is this likely to be more trouble than it's worth as far as HMRC are concerned?  I don't think any penalties would be issued as there would be no tax liabilty, but don't want to raise any red flags with HMRC.  Thanks in advance for any advice which will be gratefully received. 

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Psycho
By Wilson Philips
02nd Jun 2020 20:50

Do you own a Tardis?

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Replying to Wilson Philips:
Flag of the Soviet Union
By thevaliant
02nd Jun 2020 21:38

Hard to come by I think.

DeLorean DMC12 should do however, and there are still a few knocking about.

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Replying to thevaliant:
Hallerud at Easter
By DJKL
03rd Jun 2020 00:04

I would prefer the Heart of Gold.

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By paulhammett
02nd Jun 2020 21:42

Nope.

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Oaklea
By Chris.Mann
02nd Jun 2020 22:52

Edit * Duplicate *

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Oaklea
By Chris.Mann
02nd Jun 2020 22:50

As many members on here, would agree; you can’t rewrite history. And that is what your “arrangement” would be attempting to do.

It’s a none starter.

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By Tim Vane
02nd Jun 2020 23:31

Are you saying that the director was paid a salary but the payroll was not setup to properly record it as no PAYE scheme was necessary, or are you saying that you want to make stuff up that never happened?

Be careful how you answer.

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Replying to Tim Vane:
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By Adam12345
03rd Jun 2020 10:21

I agree with Tim - it all depends on whether a salary was actually paid and just not reported. You certainly can't retrospectively pay the salary

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By Wanderer
03rd Jun 2020 05:30

To me, from what you have written it sounds like you are just making stuff up and proposing to falsify paper work.

Suzanne Fox
Virtual Accountant virtualaccountingservices.net ltd
Member Since: 10th Feb 2020

Suzanne Fox wrote:
Can I backdate a payroll?
Can I register a client for PAYE as of April 2019 and run a retrospective payroll?

I have recently taken on a client who is a sole director sole shareholder ltd company.  They have already passed their first year end (April 20) but no payroll has been set up.  Can I register them for PAYE as of April 19, when the company was incorporated, and run a retrospective payroll?  They would be paid below the secondary threshold so there would be no tax liability.  Is this likely to be more trouble than it's worth as far as HMRC are concerned?  I don't think any penalties would be issued as there would be no tax liabilty, but don't want to raise any red flags with HMRC.  Thanks in advance for any advice which will be gratefully received. 

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By SXGuy
03rd Jun 2020 07:28

If the director believed he/she was taking a salary and was unaware of not having or not needing a paye scheme then yes you could set up a paye scheme for last year and run it.

If on the other hand, you've decided that they should have had a paye scheme as to write off 8 odd grand of director drawings then no of course not. As others have said, you can't change history to suit yourself.

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My photo
By Matrix
03rd Jun 2020 08:02

If the client wanted the benefit of your advice then they should have hired you a year ago.

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Replying to Matrix:
Hallerud at Easter
By DJKL
03rd Jun 2020 09:07

That is what the time machine is for.

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Replying to Matrix:
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By Tax Dragon
03rd Jun 2020 09:13

Wise words, worth reflecting on.

And if the OP values their own advice, they'd let the client learn the cost of not having taken it.

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By SteveHa
03rd Jun 2020 08:53

Notwithstanding the entirely correct answers regarding re-writing history, subject to how you answer Tim's and SXGuy's questions, don't bank on there not being any penalties just because there is no liability. Penalties are not tax geared.

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Replying to SteveHa:
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By Tax Dragon
03rd Jun 2020 09:11

I'll be honest Ste, I suggest that the "they would be paid" in the middle of the OP answers those questions. Had the OP said "they were paid (but didn't report it)", you'd be looking at late [but necessary] reporting and possible associated penalties.

Of course, if you really had a Tardis, you'd go back and do the reporting on time as well.

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By bernard michael
03rd Jun 2020 09:36

Is this an attempt at a MDTP advised furlough scam ?

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Virtual Accountant
By Suzanne Fox
03rd Jun 2020 09:43

Thank you for the advice everyone. No attempt to defraud, the client has paid themselves but not realised they needed an official payroll scheme. I will err on the side of caution and set up a payroll to run as of today.

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Replying to Suzanne Fox:
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By legerman
03rd Jun 2020 15:00

Suzanne Fox wrote:

Thank you for the advice everyone. No attempt to defraud, the client has paid themselves but not realised they needed an official payroll scheme. I will err on the side of caution and set up a payroll to run as of today.

In which case you could run it retrospectively, but would be hit with RTI fines. My suggestion would be to pay up to £6136 as wages* for 19/20 and the rest in dividends, then set the payroll up for this year.

*Assuming he is not an employee elsewhere (edited)

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RLI
By lionofludesch
03rd Jun 2020 10:49

The guy's a director ?

He has an annual pay period. You don't even need the Tardis, despite all the merry quips.

Just pay him two months' salary today and monthly from now on.

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Replying to lionofludesch:
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By Wanderer
03rd Jun 2020 10:53

OP was considering doing this for 2019/2020.

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Replying to Wanderer:
RLI
By lionofludesch
03rd Jun 2020 10:58

Well spotted. I'm clearly living in the past with Jethro Tull.

Though, as TD points out, the salary has been paid. It's the paperwork which needs correcting.

I think the chance of furloughing has disappeared, though.

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Replying to lionofludesch:
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By frankfx
03rd Jun 2020 11:43

lionofludesch wrote:

Well spotted. I'm clearly living in the past with Jethro Tull.

Though, as TD points out, the salary has been paid. It's the paperwork which needs correcting.

I think the chance of furloughing has disappeared, though.

Or, and please forgive me Lion, Thick as a Brick.
Dem were the days, and we wanted to be in Gary Glitters Gang? Not.

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Replying to lionofludesch:
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By Tax Dragon
03rd Jun 2020 10:53

He's been paid since April 2019, we're told.

I don't see what's retrospective about it, it's just late.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
03rd Jun 2020 16:34

The words in the OP threw me:

"They would be paid ..."

ie not "They were paid ..."

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Replying to Wilson Philips:
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By Tax Dragon
03rd Jun 2020 17:08

Me too, initially (see my reply to SteLacca). But then the OP seemed to change her mind. (Before, I think, changing it back again.)

Changing your mind is an accountant's prerogative.

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Replying to Wilson Philips:
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By Wanderer
03rd Jun 2020 17:12

Agreed, also "Is this likely to be more trouble than it's worth as far as HMRC are concerned?" and "don't want to raise any red flags with HMRC" give a whiff that's it's not happened. If it has happened as is now said then if in the criteria for RTI then there's no choice. If not in the criteria well why was the question asked? Can't help but be left wondering if the 'payments' were somewhere between the LEL and PT/ST.
"I will err on the side of caution and set up a payroll to run as of today." isn't really an option if in that band or RTI required as a result of other criteria.

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