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PAYE Error/nightmare

Self employed client have paid themselves a salary under PAYE

Client started in business by setting up a "company" - no company was registered at Companies House. They have traded for over a year and throughout that time have paid themselves a salary and operated PAYE & NIC on the salary payments (along with other employees). They have now approached us to do their first set of accounts. The business commenced in January 2016 and there appears to be no registration for the self employment as they thought they were running a company. Though they did register as an employer (which we thought would have triggered a business record). No problem with preparing accounts etc and registering them as self employed etc.

However I am struggling to figure out how to unravel the salary payments and reclaim the overpaid PAYE NIC & Employers NIC.

Has anyone ever had any experience of this?

On a side note we have now set up a limited company which will opearte the business and the old "company" will cease trading in due course.

I feel a rather long letter explaining this sutuation to HMRC is coming across my desk.

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By Matrix
09th Feb 2017 20:35

Yes I had to do this for a new client trading as a partnership. The previous accountant had advised the partners to take a salary! They changed the YTD figures to zero on the next FPS. I assume the NI and PAYE (if any) will be credited back to their PAYE account.

You just need to follow the facts of what happened and register the self-employment/NI and work out the tax as soon as possible to avoid interest and file the 2015-16 return.

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