University deducting tax when paying a "supplier"

University deducting tax when paying a "supplier"

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A university engages A for occasional duties, and in the contract document calls A a "supplier", and that the uni will deduct tax.
A normally trades through a limited company, and isn't currently registered as self employed.

A asks the uni if they can put this through the limted company. Uni says yes.
So I'm thinking, how do I persuade HMRC to credit the company's Corporation Tax with the PAYE deducted, and what PAYE code will they use? And what UTR?

So I think let's keep it simple and register as self employed.
There are no VAT thresholds involved - exempt trade.

I have actively avoided IR35 clients, and there is no sense of IR35 here.
But does the very existence of IR35 mean that it is possible to credit PAYE deductions to CT?
Or is this just a late Friday ramble?

Anyone else had this experience?

 

Replies (30)

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By David Ex
03rd Feb 2023 18:22

Gone Sailing wrote:

A asks the uni if they can put this through the limted company.

Is the contract with A or A’s company?

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Replying to David Ex:
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By Gone Sailing
03rd Feb 2023 19:11

A had a choice between the company and being self employed, so asked me.
'Contract' might be stretching it a bit.

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Replying to Gone Sailing:
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By Tax Dragon
03rd Feb 2023 19:21

You referred to a contract document in the OP.

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Replying to Tax Dragon:
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By Gone Sailing
03rd Feb 2023 19:27

so I did, sorry.

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By WhichTyler
03rd Feb 2023 18:27

Gone Sailing wrote:

A asks the uni if they can put this through the limted company. Uni says yes.

 

'[Someone at the] Uni says yes [without checking policy or the law, then someone else at uni (HR/payroll/procurement) says no and puts it through casual payroll]'

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By lionofludesch
03rd Feb 2023 18:27

Is there not some special off piste rule for lecturers where they get tax and NI deducted?

I've never dealt with any but that sticks in my mind .....

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Replying to WhichTyler:
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By Hugo Fair
03rd Feb 2023 18:44

Interesting (and useful) but not really the kind of dispensation to which I thought Lion was referring - and which, I have to say, I never encountered when running University and other H.E. establishment payrolls.

Fundamentally it is another part of the almost infinite paperwork attempting to define (or rather guide any decision on) employment status - particularly for lecturers delivering anything that is not a regular part of the core curriculum.

AFAIK once you've established the employment status (correctly or otherwise) then the Tax and NI follow on from that - without special rules for Univ lecturers (unlike those for Mariners and other special interest groups)?

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Replying to Hugo Fair:
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By lionofludesch
03rd Feb 2023 18:47

Yeah, I just had it logged in as something I might need to look up one day.

That day never happened.

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By SXGuy
03rd Feb 2023 19:15

How does one claim tax stopped on SA without being reg as a subbie or under paye?

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Replying to SXGuy:
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By lionofludesch
03rd Feb 2023 19:43

SXGuy wrote:

How does one claim tax stopped on SA without being reg as a subbie or under paye?

There's a box for tax on the orange pages somewhere.

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By Gone Sailing
03rd Feb 2023 19:22

Thanks all.
As it stands, A is being classed as a supplier, and PAYE will be deducted whether self employed or limited company.
I imagine that there will be a payslip and a P60, with a PAYE ref.
So I'll ignore that "supplier" was ever mentioned and input it on the SATR as employment. That'll work.
So that just leaves A without employment rights and indemnity insurance.
Let's hope the uni doesn't teach employment and tax law.

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Replying to Gone Sailing:
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By David Ex
03rd Feb 2023 19:40

Gone Sailing wrote:

As it stands, A is being classed as a supplier, and PAYE will be deducted whether self employed or limited company.

Is it his name on the contract or his company? Surely that’s relevant??

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Replying to David Ex:
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By Gone Sailing
04th Feb 2023 09:57

It is relevant, but the option is still open.

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Replying to Gone Sailing:
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By Tax Dragon
04th Feb 2023 14:48

Gone Sailing wrote:

the option is still open.

You ought to explain in an OP whether you are dealing with past events or planning a way forward. It affects people's answers - mine anyway - whether the opportunity to plan has already sailed.

If none of this has actually happened then, if you don't mind me saying, you are asking all the wrong questions. Imho.

What options are still on the table?

(Not that I'm intending to help you plan. Basing a plan on replies you get in here... not the best client service. Imho. Again.)

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Replying to Gone Sailing:
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By Hugo Fair
03rd Feb 2023 19:41

"So that just leaves A without employment rights and indemnity insurance" is a reasonable summary of the situation once IR35 means the contracting organisation decides to treat someone as a "deemed employee" ... or 'all the downsides without any of the benefits of being an employee' as I've heard it described.

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Replying to Gone Sailing:
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By lionofludesch
03rd Feb 2023 20:02

Gone Sailing wrote:

So that just leaves A without employment rights and indemnity insurance.
Let's hope the uni doesn't teach employment and tax law.

To be fair, a lot of employment status disputes have, at their heart, employers trying to deny employees their employment rights.

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By Gone Sailing
04th Feb 2023 10:07

Just a thought, is there a PAYE code whereby no tax / NI will be deducted under any circumstances? (my payrolls are all box standard).

OT? NT?

Even then, if A contracts as the limited company, and no tax credits to deal with, I would still need to know if the uni submits a payroll FPS which will then come back as a personal revised tax calc 4 weeks after the SATR.

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Replying to Gone Sailing:
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By lionofludesch
04th Feb 2023 10:18

Gone Sailing wrote:

Just a thought, is there a PAYE code whereby no tax / NI will be deducted under any circumstances? (my payrolls are all box standard).

OT? NT?

Even then, if A contracts as the limited company, and no tax credits to deal with, I would still need to know if the uni submits a payroll FPS which will then come back as a personal revised tax calc 4 weeks after the SATR.

0T and NT are pretty much opposites. 0T means no allowances. NT means no tax.

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Replying to lionofludesch:
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By Hugo Fair
04th Feb 2023 10:31

.. and neither has anything to do with NI.
But you can't just choose a Tax Code that you'd like, anyway!

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Replying to Hugo Fair:
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By Gone Sailing
04th Feb 2023 10:59

What if the uni are using a payroll system 'off grid' to pay suppliers with no submissions?
Daft I know, but I suspect they are.

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Replying to Gone Sailing:
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By lionofludesch
04th Feb 2023 12:06

Gone Sailing wrote:

What if the uni are using a payroll system 'off grid' to pay suppliers with no submissions?
Daft I know, but I suspect they are.

Not your client's problem. In the same way that employees are not obliged to check if their PAYE is paid over.

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Replying to lionofludesch:
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By Hugo Fair
04th Feb 2023 14:23

Quite ... so long as they receive 'pay statements' (payslips, P60s, P45) from the employer.
But I've no idea what constitutes "using a payroll system 'off grid'" anyway?

If the software is fed a PAYE Scheme number (which would be a mandatory value in any software I've encountered) then either that Scheme is or isn't valid (i.e. registered with HMRC).
If it's valid but RTI submissions aren't made for all entries, then that's one lot of (severe) penalties on the horizon - for the employer.
If it's not valid then I hate to think which laws are being broken!

Any establishment (and particularly a publicly funded one like a University) would have to be daft to do any of this ... so I doubt the validity of OP's suspicions.

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Replying to Hugo Fair:
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By lionofludesch
04th Feb 2023 14:38

Hugo Fair wrote:

Quite ... so long as they receive 'pay statements' (payslips, P60s, P45) from the employer.
But I've no idea what constitutes "using a payroll system 'off grid'" anyway?

Is it diesel generators instead of from the electric company?

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By Gone Sailing
05th Feb 2023 10:41

Truly grateful for all the comments.

The uni has specifically said, in writing, that it is going to pay A, as a "supplier", that PAYE will be deducted, there will be a payslip, and there is the option of being in A's name, or A's company.

Better the ltd co, for professional indemnity and not starting a self emp, Class 4 etc

I am sure this payroll will be operated properly and as normal.
As the original post, I can't figure out how the ltd co would get the tax credited.

That's what I have.

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By doubletrouble
05th Feb 2023 11:21

As far as I am aware if the Company is receiving the payment from the University after tax and NI deductions then they can pay this amount out to the worker so that there will be no Corporation Tax to pay as there will be no profit, the worker should also receive a P60 from the University to show the deductions.
(this is not advice on what to do)

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Replying to doubletrouble:
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By Hugo Fair
05th Feb 2023 12:30

IF this is IR35 then, broadly, yes ... although just to be clear the Company can't simply "pay this amount out to the worker", but they can make payments to their employee/director via their own Payroll.

That process will allow the previously deducted Tax and NICs to be accounted for (so they are not double-deducted) ... but is an important distinction because:
a) like all Payroll payments it must be reported via RTI; and
b) there may be additional deductions (such as SL) that were excluded from the calc of payments made to a 'deemed worker' by the contracting company.

Note: it is therefore the amount processed through its own payroll on which "there will be no Corporation Tax to pay" ... because it is an allowable expense, not because "there will be no profit" ... and this may or may not be the full amount received by the Company from the contracting company.

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Replying to Hugo Fair:
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By doubletrouble
05th Feb 2023 12:37

Yes agreed, not no profit but an allowable expense

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By Tax Dragon
05th Feb 2023 13:41

If you've been offered the role (with the same net pay either way) as an employee why would you not take it? (That's a question, not advice. Obvs.)

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By lionofludesch
06th Feb 2023 07:34

Tax Dragon wrote:

If you've been offered the role (with the same net pay either way) as an employee why would you not take it? (That's a question, not advice. Obvs.)

But has such an offer been made?

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