HMRC has alerted businesses that unused Pay As You Earn (PAYE) schemes will be shut down where there has been no activity for 120 days.
From 28 October the Revenue will be issuing letters to employers explaining that their PAYE schemes have been closed where records indicate that they have not operated PAYE or paid any subcontractors.
Any PAYE schemes opened after 5 April this year will be shut down automatically where the employer has not sent any PAYE returns or paid HMRC within four months of the scheme being set up.
Schemes registered as annual schemes will not be closed by this process.
Ruth Owen, HMRC director general for personal tax, said: “Closing schemes that are no longer needed is really important for businesses and for HMRC as it means that HMRC won’t waste employers’ or taxpayers’ time and money by needlessly pursuing returns or debts when in fact none are due.
“Since April, employers or agents (acting on behalf of their clients) who have set up PAYE schemes that are no longer needed can easily close the scheme by reporting this on their final submission. This new process helps further as it means we can identify and remove unnecessary schemes earlier,” Owen said.
According to HMRC, more than 1.69 million employer PAYE schemes, covering over 46 million individual records, are now reporting in real time.
It believes that a large number of schemes can be closed, for example because they no longer have any employees linked to them. However, it added that there are some employers who are required to operate a PAYE scheme for expenses and benefits or are required to submit Construction Industry Scheme (CIS) returns. In this case, employers should either submit a nil Employer Payment Summary (EPS) each month or contact HMRC to change the scheme to annual, and then send HMRC a nil EPS once a year.
From the end of the month, PAYE schemes will automatically be closed where
- no real time PAYE submissions have been made
- no payments have been made to HMRC
- the employer is not an annual payer
- there is no evidence that the employer wants to claim CIS deductions
- the employer has not received an advance from HMRC
- there have been no periods of construction industry liability
- there is no evidence that the employer has any employees
- there is no evidence that Class 1A NIC is due