Hi everyone,
I have a client who is going to be undertaking a new contract later on in the year. This will fall under IR35 rule. Currently they are operating outside of IR35 and so a normal directors salary is run and reported on a monthly basis.
When caught under IR35 when is the deemed salary reported to HMRC? I.e. do you run a normal directors salary each month and then on the final month calculate and report the deemed salary and report the difference? Or will that then fall fould of RTI reporting?
The reason I ask, is that in an ideal world it would be submitted on a monthly basis and for RTI reporting i feel that would be correct, but in this case the client is a little lax with providing information so I feel that would not work efficiently.
Any advise on how anyone else deals with it would be appreciated.
Many thanks
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You should calculate an actual salary of (not less than) the amount of the deemed salary each month and report it on an FPS. The salary does not have to be actually paid to the director - it can be credited to his DLA.
All the client needs to provide is his company's sales (excl. VAT) each month and any personal expenses - mileage, train & taxi fares, etc., for you to calculate the amount of the deemed payment.
I presume that this IR35 contract is not within the public sector, in which case the following page should be helpful:
https://www.gov.uk/guidance/ir35-what-to-do-if-it-applies