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Unpaid salary but PAYE paid-can't make this up !

PIL Ld trades for a short time and accounts for PAYE on Directors' unpaid salaries. Consequences?

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PIL Ltd trades for a short time . Directors are entitled to salaries, and PIL pays PAYE and NIC on these entitlements which are not paid.

 PIL ceases to trade after a short time, and gives Directors P45's. PIL files CT returns, Companies House filings showing tax and NIC payments as wage costs, but does not accrue for unpaid Directors' salaries.

What is position of PIL[now in liquidation] and former Directors?

Is PAYE recoverable

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By Tax Dragon
11th Jun 2021 16:16

Montrose wrote:

Is PAYE recoverable

On what basis?

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By David Ex
11th Jun 2021 16:39

Deleted

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By The Dullard
11th Jun 2021 16:52

To elaborate on TD's point, just as the company was obliged to payroll the salaries (by virtue of ITEPA 2003, s 686 Rule 2, the individuals are considered to have received their salary by virtue of s 18 Rule 2.

So, if you include the salary in their total income, and the PAYE exceeds their liability, then yes, you can recover the excess.

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Replying to The Dullard:
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By Hugo Fair
11th Jun 2021 17:47

Although I'm not clear as to what OP is saying has/hasn't happened ... I presume one can't retrospectively change one's mind about salary having been 'paid' (which is indicated by the processing of PAYE & submitting of FPSs, irrespective of whether any net amount made it into a director's bank account)?

If the individual's SATR shows that PAYE (or other IT paid) exceeds their liability, then of course the excess can be recovered. But not just on the basis that you've changed your mind after the event as to whether salary was 'paid'?

If, and it's a big if, I've read OP correctly ... then the 'missing' salary is wrongly missing from the accounts - but should show as a creditor?

[All these ?s are because I'm breaking the cardinal rule and just using 'logic', in the hope that one of you will correct me if necessary].

EDIT: just seen TD's post that's crossed with this ... and am going out to book a sense of humour replacement (one that will hopefully let me know when I've encountered subtle drollery)!

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Replying to Hugo Fair:
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By Tax Dragon
11th Jun 2021 21:20

I occasionally hear about someone who's had some 'excessive' bonus being shamed into 'giving it back'. I do wonder about the tax and NI - presumably that just sticks.

Not particularly relevant here. But similar to your point/logic.

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By sarahg
11th Jun 2021 16:52

Well the directors had salaries that need to be declared if they do tax returns

Who did the accounts that were missing the salaries?

Is the company with a liquidator?

Why would a PAYE refund be due?

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By Matrix
11th Jun 2021 17:01

Surely they are just creditors even if the salaries aren’t in the accounts.

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By Tax Dragon
11th Jun 2021 17:34

To elaborate on Matrix's point (though my aplomb as an elaborator is considerably less than that of certain other contributors to this forum)*, preparation and submission of incorrect financial statements would appear to impact on neither the fiscal liability (Mr Bailey eat your heart out) that was (by the sound of it correctly and timeously) paid (the PAYE) nor the pecuniary liability that remains - the undrawn remuneration.

*QED (Dulls's humour above had me laughing out loud. To provide spot on technical analysis in a funny way is genius. Whereas you'd have to be wrong in the head to laugh at - or at least with - my effort at elaboration.)

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RLI
By lionofludesch
11th Jun 2021 18:12

I vote no.

But the great news is that the directors can sue the company for their net salaries and the NIC will count towards their retirement pension entitlement.

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