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Moneysoft

IR35

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we have a client who is inside IR35, but their engager stuffed up and paid them gross

we are left running the deemed calculation which is fine, we've gone through and calculated the deemed salary and NI on this, however we cannot seem to get the details into Moneysoft correctly to file the RTI returns

Moneysoft is calculating a different NI liability and we cant see to overide it

can anyone advise where to go with it?

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By Hugo Fair
17th Apr 2021 12:53

"we have a client who is inside IR35, but their engager stuffed up and paid them gross."

Was the payment pre-April this year and the engager in the public sector? Or was the payment this month and engager was either in the public sector or a medium/large-sized company in the private sector?
If Yes to either of these, then the engager was responsible for issuing a Determination (and providing a copy of it to your client) ... and if the determination was IR35 then the engager was responsible for treating your client as a 'deemed employee' (and operating PAYE on payments due).
If No to both questions (or the determination was non-IR35), then it's hard to see why you think the engager stuffed up.

Anyway, if the engager did stuff up then it is down to them to resolve the situation ... why are you "left running the deemed calculation" (presumably on behalf of your client)?

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Replying to Hugo Fair:
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By Crouchy
17th Apr 2021 13:03

it is public sector and the engager issued the dertmination inside IR35 year ended 5th April 2021

however they ommitted the contractor off the payroll and paid them gross, they admit the mistake but wont correct (not sure why).

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By Hugo Fair
17th Apr 2021 14:05

Great ... if engager issued Determination (of inside IR35), then by default it is the engager that must treat as 'deemed employee' and operate PAYE accordingly.

The only exception that I can see (although I don't fully understand matters when a 'chain' becomes part of the contractual process) is if the Determination was issued not just to your client but also to some intermediary in the chain (such as an umbrella company) ... in which case I believe it can in certain circumstances become the responsibility of the intermediate to operate the PAYE. [You'd need to read up on all that I'm afraid].

But either way, based on the Determination that you've confirmed (and which I hope your client has retained her/his copy), the responsibility for operating PAYE cannot land back on your client ... so, I repeat, why are you "left running the deemed calculation" (presumably on behalf of your client who can't make himself a deemed employee in his own company)?

At the very least I'd ask (or indeed demand) a written explanation from engager as to why they won't correct - in case you (or indeed I) haven't got the full story!

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By GR
17th Apr 2021 14:14

You just have to process any salary payments made to the contractor from their own limited company as non-taxable salary payments and submit the RTI to HMRC.

The PAYE and employee NI that should have been deducted by the public sector or recruitment agency should be left in the company as presumably the public sector client or agency will want this money back at some point, i.e. DR Wages and CR creditors.

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Replying to GR:
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By Hugo Fair
17th Apr 2021 15:56

In theory, Yes (if the question is about how your client can extract money as an individual from their own company).
BUT to process "as non-taxable salary payments and submit the RTI to HMRC" would be wrong if not in receipt of documentation from the engager (or whoever has operated the 'deemed employee' PAYE) that relevant Tax & NICs have been paid over (or at least accounted for) to HMRC.
So, the suggested solution may very well be correct accounting treatment but is not correct operation of PAYE.

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By Paul Crowley
17th Apr 2021 15:47

I would not trust anything in this scenario
To preserve pension entitlement I would put through just below annual ERNIC salary on the RTI

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By SXGuy
17th Apr 2021 16:52

Absolutely lost on this one. If the engager deemed ir35 but failed to calculate deemed payment and put them through paye, why for the love of all that's holy are you putting it through your payroll? Makes no sense at all.

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