I have a payroll client husband and wife with 2 streams of income, 80% income is under the Public sector IR35 and 20% is not. Her agency has been deducting the tax and nic as required since April 2017 and remitting to HMRC and paying the net salary into the company bank account. The client (wife) has been transferring all the salary to her personal account. The wife has been off payroll since April 2017 when the new rules started but the husband is still on payroll taking a salary of £9000 a year to utilise the other 20% income outside IR35 and I have been submitting HMRC RTI returns on a monthly basis.
Now the client (wife) wants to become an employee of the agency and has asked me to to give her a P45 as she no longer wants to paid the net salary (for the work caught under IR35) into the company anymore as she does not have employee benefits like annual leave and pensions, she wants to become an employee of the agency. All along I thought the agency is the one that should issue her the P45 as it is the one that has been deducting the tax and NIC. I really need some advice on this, who is resposible for issuing P45 to the client me or the agency? If what I have been doing is wrong, i.e processing the husband`s salary only under HMRC RTI not the wife how do I correct it? Thank you in advance for your assistance.