We have a limited company client which hasn't traded but has a PAYE scheme. No employees, just directors (who didn't receive a wage).
In the past, in these circumstances, it has been our understanding that as there were no P11 entries, you cannot submit a NIL P35. Instead, we have wrote to HMRC stating that no P35 is due.
I suspect this was to avoid having to pay out the online filing incentive that stopped a year or so ago.
So what would other members do in these circumstances?
I think HMRC might issue an automatic fine if you don't file the return and then rescind it when you point it out to them one wasn't due. But thinking about it if you file a nil return for qtr4 they should realise
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Thanks Tony, I never want to get into a position where HMRC issue penalties and then we correct them - it's just easier to tell them that a return isn't due in the first place.
And don't assume they will put 2 and 2 together!
I was making the distinction between a NIL return (i.e. a P11 has been kept) and no return due at all. We wrote to HMRC for our client above saying that no return was due. HMRC told our client that as the company had directors, it had employees and therefore a NIL P35 was due.
I remember encouraging clients about 5/6 years ago to try and have a PAYE scheme due to the £825 tax free incentive that they were giving out, and their stance was to try and argue that no P35 was due. Seems like the person my client spoke to today just wanted something filing, even if no-one received any wages at all.
If you have an Ltd company, you should also set up a PAYE system as by definition of Ltd company you need a director who is therefore an employee (whether paid or not). As such, a PAYE registration automatically requires submission of P35 whether it is nil or not. Tbh, filing a nil return is so simple and the penalty for not filing is not worth risking.
I file nil P35's each year for all my clients that have payrolls set up - but have no P14, P11d's etc. Its simpler than trying to shut them down, and I have had problems with the HMRC backdating schemes!
The only problem this year, was many of the Nil returns submitted before 5 April 2011, where treated by HMRC for 2009/10 instead of 2010/11 which they were actually for. In fact I understand P35's submited using the HMRC software prior to 5 April 2011, also produced everything for 2009/10 instead of 2010/11!
I have had to redo all p35's Nil returns I submitted before 5 April to get the HMRC to record them correctly.
I file nil P35's each year for all my clients that have payrolls set up - but have no P14, P11d's etc. Its simpler than trying to shut them down, and I have had problems with the HMRC backdating schemes!
Yes it is pretty difficult to even get PAYE schemes shut down. We still have them for companies that have been wound up (and yes, we tell them, we ask for them to be closed, etc..). I think the logic is: the more inactive PAYE schemes that are open, the more chance that a P35 won't be issued, the more penalties they can issue!
