There is so much mis-information on HMRC website, where they tell you want they want you to do rather than what you are legally required to do I am asking the learned memebers here:
Does a company have to register for PAYE if just the director being paid, and the pay is below primary threshold for NI?
Secondary question, if they are not required to register, if they opt to for March 2016 will they be subject to penalties for late final FPS,. and if levied can they be sucessfully appealed against?
Many thanks in advance
Replies (12)
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It's a tough one. The only legislation I can find requiring registration in SI 2010/5 regs 2 - 5. These point to ITEPA 2003 s.683 where income falling within the definition requires registration.
However, the SIs appear to be couched in AE rather than PAYE generally.
Perhaps someone can come up with something more specific.
Does the Director have another job? If so then yes a scheme is required. If not then why are you paying below the threshold?
I thought it was the LEL not the PT that determined registrastion requirement? (Other jobs aside)
I thought it was the LEL not the PT that determined registrastion requirement? (Other jobs aside)
Agreed. If the pay is below the NI Lower Earnings Limit of £490 a month (£5,876 a year) and the director does not have another job or pension, the company does not need to apply for a PAYE scheme. By the same token, the director will not get a qualifying year for the state pension. On pay at the LEL or up to the NIC Primary Threshold of £680 a month (£8,164 a year), no NIC are payable, but you need a PAYE scheme and monthly RTI reporting so that HMRC knows it is a qualifying year for the state pension.
I don't think you need to register but you need to review whether the plan is a wise one.
You don't reveal enough information to say.
From the HMRC PAYE Manual:
A PAYE scheme is only required where one or more of the following occurs / arises
Payments at or above the lower earnings limit are made to directors / employees
Payments are made to a director / employee who receives payments from another job or pension
Benefits and / or expenses are provided to a director / employee
Payments are made to subcontractors
Or exceptionally
When a limited company intend to claim a refund of CIS deductions suffered only
Note: If none of the above occur it is not necessary for the employer / contractor to have a PAYE scheme.
Who is "we"? When were you engaged and why are you comfortable in rewriting history? There have been loads of similar threads in the last week, I wouldn't do it. If he did not engage an accountant prior to 5 April then any advice can only be prospective IMHO.
I am not asking to re-write history, I am asking what the penalties will be for correcting an omission.
When did you decide this omission occurred?
What contemporaneous evidence do you have that there was an omission?
Well I doubt you can backdate registration that far nor would you want to incur penalties 16 x £100 late filing penalties. Has the salary been treated as such in the accounts and did you prepare them or a previous adviser?