Directors salary not processed through PAYE

Taken on new client & need to complete SA for 16/17 for dividends (previously not registered for SA)

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I have started a new practice & taken on a LTD co with a single director.  The y/end is Feb17 and dividends paid were £25k so I need to complete SA for 16/17.  In the P&L a directors salary of £8,160 was also put through but not via PAYE.  Can this be done?  when I am completing SA it asks for employment income from P60 or P45 but obviously I don't have this, should I just put the £8,160 through?.  Also because it is the first time he has registered for SA it is asking when became a company director which was 2009 so as far as HMRC are concerned should have completed SA from this time? Again what should I do?

Any help would be appreciated

Thanks

 

Replies (6)

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By RLK
04th Jan 2018 09:27

In terms of the £8160 you are correct that is should have been processed on an RTI return to HMRC on or before the date of payment. If this has not been done, you will need to do an earlier year adjustment either through HMRC's free software or on your own payroll software. You can then process the P60 for the year and you client may get late filing penalties.

If the director received dividends in prior years then he should have completed a self assessment as this is the only way that HMRC would know to collect tax. You can only deal with what you have from the time of the appointment though, if HMRC contact you regarding prior years then you may have to have an additional scope of work drawn out with your client.

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Replying to RLK:
By SteveHa
04th Jan 2018 10:10

RLK wrote:

If the director received dividends in prior years then he should have completed a self assessment as this is the only way that HMRC would know to collect tax.


Not necessarily. If the client was basic rate in previous years and had no other untaxed (or incorrectly taxed) income, then any dividend tax will be covered by the notional tax credit, and so no requirement to report it.
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Replying to RLK:
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By Euan MacLennan
04th Jan 2018 10:33

RLK wrote:

In terms of the £8160 you are correct that is should have been processed on an RTI return to HMRC on or before the date of payment. If this has not been done, you will need to do an earlier year adjustment either through HMRC's free software or on your own payroll software. ... and you[r] client may get late filing penalties.

I agree, but you will only be able to submit an EYU if the company has now been registered for a PAYE scheme, specifying a first payment of salary in 2016/17 on (say) 31 March 2017.

The potential penalty would be for failing to file the final EPS for 2016/17 by 19 April 2017, but a penalty is unlikely to be charged if no PAYE is due, which would be the case if the director had no other job or pension.

RLK wrote:

You can then process the P60 for the year

The form itself is irrelevant - it is only given to the employee.

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Replying to Euan MacLennan:
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By RLK
04th Jan 2018 11:46

It is not entirely irrelevant as directors should keep all documents relating to pay and tax as part of their records.

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By SUZANNE2406
04th Jan 2018 11:02

I have now registered a PAYE scheme but with a first pay date of Dec17 so that it's done correctly for y/end Feb18.

Euan - do you have any other advice of how I should complete the SA?

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By NYB
04th Jan 2018 11:06

I would do this totally incorrectly. I would put the £8600 on the tax return as employed income and the tax reference number as 123/XXXX or similar. I have seen this done often. Then start a scheme to do it correctly in the future. To start doing EYU etc - God knows the work involved. At the end of the day the correct tax is being assesssed - its just the stupid bureaucratic paperwork that is incorrect,

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