Do I file employment earnings of a client

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Looked at my ASA and all the PAYE had been shown as credited but not paid. The client has not made any payments to HMRC. The following is an example of what I mean:-

 

Due date 22 July 2023

Monthly summary amount due

Total charges
£71.00
Total credits
£2.08
Total payments
£0.00
Total amount due
£68.92

Charges

Full Payment Submission (FPS)
Charge type Charge amount
Income Tax £71.00
Total amount due from FPS £71.00
Total charges £71.00

Credits

Other credits
Charge type Credit amount
Repayment Interest Credit for month 2, 2023 to 2024 £2.08
Total other credits £2.08
Total credits

£2.08

Would I be correct putiing all his earnings and PAYE on his 2024 SAR?

 

 

Replies (30)

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the sea otter
By memyself-eye
13th Apr 2024 18:42

what does his P60 say?

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Replying to memyself-eye:
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By Kosher
13th Apr 2024 20:03

memyself-eye wrote:

what does his P60 say?

It shows Earnings, tax and NI. But the client has not paid any PAYE in 2023/24 and it was shown as a credit in my ASA and not shown as a payment.
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JCACE
By jcace
13th Apr 2024 22:33

What was shown as a credit?

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Replying to jcace:
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By Kosher
14th Apr 2024 09:05

jcace wrote:

What was shown as a credit?

The underpayment interest and tax
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JCACE
By jcace
14th Apr 2024 17:15

The whole amount of tax deducted has also been shown as a credit?

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By Kosher
14th Apr 2024 22:08

jcace wrote:

The whole amount of tax deducted has also been shown as a credit?

Yes
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Replying to Kosher:
JCACE
By jcace
15th Apr 2024 11:20

In that case, it would appear there is no outstanding liability. Do the later credits give any indication as to their nature? Sounds like HMRC might have credited the liability from something else, like an overpayment of another tax that's been reallocated or possibly earlier years' credits unused eg EA, SMP, CIS

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Replying to jcace:
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By Kosher
16th Apr 2024 11:26

jcace wrote:

In that case, it would appear there is no outstanding liability. Do the later credits give any indication as to their nature? Sounds like HMRC might have credited the liability from something else, like an overpayment of another tax that's been reallocated or possibly earlier years' credits unused eg EA, SMP, CIS

He has now told me that HMRC are chasing him, in his old company's name, for the underpaid PAYE. It is his problem and not mine.
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By Lucy N
13th Apr 2024 20:15

If the earnings have been reported to HMRC you need to include on his tax return. If the employer has not paid the PAYE/NI that is a separate issue

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Replying to Lucy N:
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By Kosher
13th Apr 2024 20:27

Lucy N wrote:

If the earnings have been reported to HMRC you need to include on his tax return. If the employer has not paid the PAYE/NI that is a separate issue

His company has been dissolved.
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By Lucy N
13th Apr 2024 20:43

The company will not have been just dissolved with an HMRC outstanding as they would have challenged the dissolution- was it liquidated?

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By Kosher
13th Apr 2024 20:53

No it wasn't liquidated and the dissolution went unchallenged. I am thinking not to put the tax on the return. The earnings will have reduced the company's tax by £811.00 But put the employment earnings of £4,267 on the return so he has to pay £853.00. Not sure that would be right either, it is a tricky one.

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Replying to Kosher:
JCACE
By jcace
13th Apr 2024 21:12

You enter on his tax return the earnings per P60 and the tax deducted per P60. If the employer hasn't paid HMRC, that's between the employer and HMRC.

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Replying to Kosher:
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By FactChecker
13th Apr 2024 21:17

As per my comments that have crossed with this ... nothing is that clear to me other than it's a mess.

But, based on your latest info, I don't see that you have much choice regarding his gross earnings (assuming that's what he said they were when he was responsible for his company) ... and you certainly can't put an amount of 'tax paid' (not only because you say it wasn't but because there's no evidence that anyone ever claimed it had been).

Personally I've no idea whether that is 'right' (morally or equitably) but I can't see any other option ... and he appears to have 'got off' without paying ER NICs (although HMRC can re-open the company and have the powers now to chase him personally for such corporate debts).
I presume you weren't the agent/accountant for the company?

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Replying to FactChecker:
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By Kosher
13th Apr 2024 21:46

I wasn't the agent or the accountant, brand new client.

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By FactChecker
13th Apr 2024 21:10

Can we start at the beginning with a few basic facts (so we don't have to waste time guessing) ...

- your client is an individual taxpayer (but his previous company is not your client)?
- that company had no other employees (but it's accounts show him as an employee)?
- what are EE earnings, ER NICs, EE tax/nics, any other employment costs in accounts?
- do those accounts figures accurately map to those submitted to HMRC via RTI?
- is there any evidence of 'employee' payments (as opposed to DLA or whatever)?
- in which mm/yy did he cease to be an employee?
- in which mm/yy was the company liquidated/dissolved (and which was it)?

There are probably loads more pertinent questions ... but as it stands it's not clear to me what situation you are attempting to portray.
A company that appears to have filed but not paid its PAYE obligations and yet has been 'closed' in some manner vs. an individual (your client) for whom you wish to file a SA return ... where some of the intended entries will not be matched/validated at HMRC's end?

I know it may not be your 'fault' but you really have got some curious clients there.

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Replying to FactChecker:
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By Kosher
13th Apr 2024 21:52

I did not deal with his company. The company was shut down in October 2023 and its last RTI was August 2023.

I think it is going to be quite tricky and could cost me a lot of time to sort out. I will see if he can pay me up front and if not tell him to go elsewhere or file his own return.

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the sea otter
By memyself-eye
14th Apr 2024 13:46

Not tricky - just file the numbers on his P60. It's his job to pay/not pay any shortfall.

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Replying to Kosher:
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By Tax Dragon
14th Apr 2024 22:35

Kosher wrote:

The company was shut down in October 2023 and its last RTI was August 2023.

How then is there a P60?

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By FactChecker
14th Apr 2024 23:48

Wood for the trees, eh ... or in this case the fake tree hiding in plain sight?
Well spotted ... I got distracted and missed that.

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Replying to Tax Dragon:
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By Kosher
15th Apr 2024 11:27

Tax Dragon wrote:

Kosher wrote:

The company was shut down in October 2023 and its last RTI was August 2023.

How then is there a P60?

Figures shown on his Payroll software.
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By DKB-Sheffield
14th Apr 2024 13:17

The first question is clearly why... and indeed how... have you got access to the PAYE scheme for a non-client (the company), post-closure of that company, and - one should assume given the company is closed (although the assumption is highly doubtful) - post cessation of the PAYE scheme?

The information you have supplied per your ASA (ignoring that PAYE schemes are not displayed in the ASA) cannot possibly be accessed through a 64-8 authorisation for an individual - where the PAYE scheme is registered in the name of the company.

It must, therefore be assumed that you have also engaged with both the dissolved company client (not sure how this is possible contractually, or how it passed basic AML checks) as well as the individual.

Immediately, I'm drawn to assume (dangerous) that the company has been closed incorrectly. IF (and it's a quite big 'IF'*) the company owed tax, an application should (must) not have been made for voluntary strike off without following the correct processes outlined in CA2006 s1003 onward. This includes notifying creditors (i.e. HMRC).

The above said, the company's debts are not the individual's debt. Had this been an unconnected company employee, or had the (close) company been subject to formal insolvency proceedings, and had the employee been filing an SATR based on the P60, I would, without a doubt be proceeding without question. The employee has 'paid' tax, and whilst the employer has failed to pay said tax, that is of little consequence to the employee - and is the purpose of the insolvency proceedings. Even in this case, assuming the employee/ director has a P45/P60, and assuming you are satisfied this has been correctly reported on FPS submissions, I see no reason for the P45/ P60 figures to be included as 'tax deducted' on the SATR. To do otherwise would be to wrongly report the affairs of the individual (thus resulting in a mismatch at HMRC's end). Were your client to make any payment to clear the liability (I am not advising either way) this should be to the (assumedly still open) PAYE account of the company - not through SA.

However, the big issue is... now you are armed with the facts, gained through your professional work, you will need to consider other factors. There may already be a reporting requirement under AML (assuming your facts are accurate, it's hard to see how there wouldn't be - even if you ditch the client before doing any work). To see the information on your agent account, you must be the nominated PAYE agent for the company (no other way to view). The PAYE scheme must most likely still be active (or you couldn't view) thus the company wasn't closed correctly/ fully - with HMRC.

IMHO this is likely to be a much greater issue than PAYE deductions. If the company were to be restored, CT, VAT, trade creditors... may all come out of the woodwork (I can't imagine HMRC restoring a company for £800*, but with VAT and CT, it may be worthwhile). There's then potential liquidation (you'll doubtless end up being involved in this). And your fees are suddenly looking very unlikely!

OOI... what did the previous account say? Did PC come back with 'no concerns'?

*£853 Liability- On a final point... you mentioned £853 in tax? The July liability was only £77. Why the £853? Seems odd that July liab was £77 BUT period April to August was 11 times that amount? Further, month 2 (05/06) seems to have been paid (hence the repayment interest in your extract). Thus, it seems August liability was £776 if £853 remains unpaid?! Are you sure the liability is £853, or are you misreading HMRC's info (easily done). What does the annual statement say? Are there any unallocated amounts? Lots to review... if you're going down that potential rabbit hole of looking into the company's affairs!

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By Kosher
15th Apr 2024 10:37

I have told client to go and deal with it himself. He had his own Business tax account and filed all his own PAYE submissions. I have told him that HMRC could open up the company and potentially cost him a lot more money to sort out. Since he still has this Business tax account I have told him to file nil PAYE submissions from April to August 2023. I don't have the time or the energy to deal with this.

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By DKB-Sheffield
15th Apr 2024 11:11

Obviously that's the prerogative of you and your client. However, not one I'd be comfortable with... re-writing history, for a company that was dissolved 6 months ago, by someone (ex-director) who would have no authority to make that submission.

You have, however, missed my point regarding month 2. The information in your OP suggests month 2 may have been settled? In addition, your £853 (tax) doesn't seem right.

Realistically (and I'm referring to the company side, as opposed to the personal tax side)... if payments have been made in the year, zero-ing the FPS submissions (likely incorrect) will result in an overpayment - which will be BV (as company closed) and not returned. Your client will have undeclared income... which has already been taxed and paid!

You seem to be treading on the wrong side of a fine line here. Walking away and considering AML is one side of that line. Advising the client (incorrectly) on what to do and leaving the ball in their court is IMO on the wrong side of that line (and on that could easily have future implications for you).

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Replying to DKB-Sheffield:
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By Kosher
15th Apr 2024 11:23

I had not signed on the client and have decided not to now. He had made the submissions himself using his PAYE scheme in his Business tax account. I cannot see why there would be implications for me because I did not get him authorised under my ASA. I am off on my first holiday since last May next month. We are also selling our house and my time is taken up packing for the move, which is after we come back off holiday. It is up to the ex company director what he does, he has not taken my suggestion because he says he is due a tax refund because he has been trading at a loss through his self employment. If I took on every Tom, Dick or Harry, who came to my door, I would never have any free time to go on holiday or do anything else. It is his problem and he has instigated it and it is up to him to deal with it.

Your other point, about the tax, the earnings and tax were from Month 1 to Month 5. The one I showed in my post was just an example.

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By DKB-Sheffield
15th Apr 2024 12:37

I apologise, I must have misread your posts, when drafting your response.

If you have no approval, the information stated in your OP about viewing the ASA (or whichever HMRC portal) was clearly incorrect. Furthermore, the figures shown for month 3, which I assumed were related to the former company of this prospect (and thus drew my conclusions from), were merely an example (thus leading to my assumptions being incorrect).

However, if you did - as stated in your response of today - tell the propsect to [re]file 'nil returns', that sounds like advice (whether a fully-engaged client, authorised with HMRC, or not). If acted upon (by you, or the prospectt), and if that advice was found to be incorrect (which sounds possible), there is clearly scope for the prospect to pursue a future course of action.

Now, the prospect is not going to be a client, and based on the knowledge of what has happened, and what you have been informed they intend to do, you clearly need to consider any further reporting requirements you may have.

FWIW, I agree - you don't have to take on the client - there is little doubt. Of course I agree you deserve a holiday - nobody should question that! The concerns for you are... have you overstepped the line by inadvertently providing advice to a (non) client AND has the information you have gleaned through your professional dealings triggered a requirement to file an SAR? Alas, neither can be (nor should be) determined on a public forum!

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By More unearned luck
15th Apr 2024 21:18

If your client is self-employed might not the FPS data you can see on your ASA relate to the PAYE scheme he runs in respect of his employees and that it is nowt to do with the defunct company?

If that is not the case (and he doesn't have a scheme for his butler), then it seems that the ASA system is insecure as it is letting you see the data of a taxpayer who hasn't given you authority to see that data (as you assert that you were never agent for the company).

If you have a P60 from the company's PAYE scheme then it has been wrongly issued. Forms P60 should only be issued to employees employed on 5 April. People who leave before that date should get a P45.

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Replying to More unearned luck:
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By Kosher
16th Apr 2024 11:32

More unearned luck wrote:

If your client is self-employed might not the FPS data you can see on your ASA relate to the PAYE scheme he runs in respect of his employees and that it is nowt to do with the defunct company?

If that is not the case (and he doesn't have a scheme for his butler), then it seems that the ASA system is insecure as it is letting you see the data of a taxpayer who hasn't given you authority to see that data (as you assert that you were never agent for the company).

If you have a P60 from the company's PAYE scheme then it has been wrongly issued. Forms P60 should only be issued to employees employed on 5 April. People who leave before that date should get a P45.


I viewed the figures on his Business tax account and his payroll software.
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By More unearned luck
16th Apr 2024 11:39

The opening words of your question were "Looked at my ASA...".

Logging in as your client is an offence, but perhaps you looked over his shoulder when he was logged in.

What do you mean by 'his' payroll software? It can only mean him as an employer, unless you are the sort of person who fails to distinguish between flesh and blood clients and their companies.

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Replying to More unearned luck:
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By Kosher
16th Apr 2024 14:03

More unearned luck wrote:

The opening words of your question were "Looked at my ASA...".

Logging in as your client is an offence, but perhaps you looked over his shoulder when he was logged in.

What do you mean by 'his' payroll software? It can only mean him as an employer, unless you are the sort of person who fails to distinguish between flesh and blood clients and their companies.

Sorry I used the wrong words because he is not on my ASA. I did correct it later to his Business tax account and his payroll software. Any way he now has decided to pay HMRC and I've decided not to take him on. Just going to refuse new clients in the future because I am winding down to full retirement.

Today I am clearing up a mess an ex tenant left, many holes in wall need filling and the total flat need decorating and cleaning. If the government increased state pension by 100% then I could get by without working. The other day I saw a posting about the living wage at £11.44 per hour. 35 hours a week equals £20,820 a year and that is a living wage, so I get £11,500 so I have to work to pay my bills and have holidays. Like the police OAP's aren't allowed to strike, in fact we cannot. Sorry for going off the tangent but what else can we do to pay our bills?

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