New client has a small Limited Company which made a profit of 12,000 in its first 12 months to 31st July 2018. He drew money out of the business but has not set up a PAYE scheme.
He had no other income in personal tax years 17/18.
I dont think you have to set up a PAYE scheme if you only have one employee below the LEL of 5,876.
Would it be possible to put 5,876 as salary for 17/18 through the Limited Company for the year to July 31st 2018 which would also go on his SATR for 17/18?
The Company income was also subject to CIS deductions of 20%. Usually HMRC only seem to refund CIS (in excess of Corporation Tax due) if FPS/EPS have been submitted at year end. Is it possible to reclaim CIS if you don't have a PAYE scheme? Is there a way round this?
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You will need to backdate a payroll registration and file an EPS for the CIS deductions. Whether you choose to include a salary will depend on whether you believe the withdrawals were salary or not. There is obviously the risk of late filing penalties for late FPS but not sure if they apply to late EPS.
In any case I wouldn't do any retrospective tax planning, only prospective.
Agree with this, the theory is correct but do you really want to backdate a salary when it clearly wasn't decided upon at the time of drawing the funds?
Risking your reputation to help out a client who came to you after the event is not worth it in my eyes.
Are you saying his drawings amounted to £5,876? Wow, that's a coincidence. If drawings occurred between 06 April and 31 July 2018 they would be 18/19 surely?
Except you didn't really mean any of that, did you? Think it through.