Hello
I could really do with some advice as my accountant is contradicting what someone at HMRC has said but a second time contacting HMRC confirmed what the accountant said.
I am the sole director of a limited company with no employees. I did not register the company for PAYE because I didn't intend to pay myself more than £116 per week which is confirmed here: https://www.gov.uk/paye-for-employers
My personal and business accounts are managed by a single online banking account. There was one occasion in March this year (while I was unwell otherwise I wouldn't have been careless) where I had accidentally transferred £1,000 from my business account to my personal account when I meant to transfer from one personal account to another.
The total amount paid to my account between April 2017 to April 2018 is £3,000. I don't know if the £116 per week is literally no more than £116 per week or if you can do 116 x 52 = £6,032 and make sure in that year no director was paid more than £6,032. Is this accidental payment ok to not have to register for PAYE or should I consider that £1,000 a directors loan and pay it back? Corporation tax told me to ring employers helpline, employers helpline told me to ring corporation tax and then when I spoke to corporation tax again, they told me to call self assessment helpline.
So now when filling in my self assessment, am I supposed to enter my company as an employer since it's under the threshold/has no PAYE? One person at HMRC said no and I should count earnings as self employment. Another said yes but when asked to enter a PAYE, use NONE. So which is it?
If I have to consider £1,000 as a loan, is this included or excluded as part of my earnings on the self assessment?
Replies (9)
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What has your accountant suggested? I would have though this was a DL rather than pay or a dividend because you are trying to classify what it is after the event. It isn't part of your earnings.
If the £1000 was genuinely paid in error, you simply need to repay it.
Why haven't you done so already ? It casts doubt on your assertion that this was accidental.
I'm sorry to hear about your illness and I'm not unsympathetic.
However, you know about it now and, apparently, it remains unpaid. Repaying it would strengthen your case and - probably - help you avoid a s455 charge of 32½% or more.
Isn't £1,000 a little way below the de minimis for s 455? The logical approach would surely be to just reverse the transaction that was made in error: it couldn't have been earnings unless it was intended as, or became, a reward for being an employee/director.
Always assume if you ask anyone at HMRC you have a good chance of getting duff information.
Your accountant ought to be on the ball.