Hello, could anyone advise me whether the payroll scheme for a sole trader needs to be closed down when he becomes a limited company, and then open up a new scheme in the limited company name?
Or can the scheme run as normal?
I've not done payroll for a limited company before. Other than the director being added onto the payroll (and highlighted as being the director) is there anything I need to do or watch out for?
It needs to be converted over rather than closed and restarted.
Recently had to get new PAYE books printed for a straight name change for a limited company so sure that you will have to do the same for your client.
On the bright side the people that I spoke with at HMRC for this one were some of the freindliest and most helpful that I've encountered.
Have fun,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I'd definitely check with the tax office. We've had cases recently where clients in this situation were told to close down the old PAYE scheme and start a new one under a TUPE. So they have to issue P45s to all employees and then use them to start them up in the new employer. Then file a cessation P35/P14 set for the closing scheme.
Thank you both. I am going to have to try and talk to HMRC. Thing is my cleint has just told me that although he has registered as limited he isn't trading as limited company yet?? Not sure what is going on, its like getting blood from a stone. I'm his bookkeeper and didn't even tell me he was registering!
I had to do this but it was several years ago, I spoke to HMRC at the time and there is no way you can transfer the PAYE scheme from a sole trader to a Ltd Co. You need to give HMRC PAYE the end date for the sole trader scheme and the start date for the Ltd scheme. You will be given a new reference number and have to set up a new online login.
mine was limited to limited (just a name change) and that needed everything to be reissued under the new name but the scheme remained the same.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
mine was limited to limited (just a name change) and that needed everything to be reissued under the new name but the scheme remained the same.
What was the "everything" that needed to be reissued? The only thing that I can think of is the book of paying in slips (that most businesses don't use any more as there are many other ways of paying HMRC) and I doubt that anyone would care what name was on those. The accounts office reference on them is the important thing so no need to re-issue if that hasn't changed.
-- Edited by Tom McClelland on Friday 14th of October 2011 08:01:42 AM
VAT schemes can be transferred from s/t to ltd co, but PAYE schemes can't. Even more of a PITA when CIS is involved, if a s/t is registered for gross, the ltd co has to start again and meet the tests to get gross status.
What was the "everything" that needed to be reissued? The only thing that I can think of is the book of paying in slips (that most businesses don't use any more as there are many other ways of paying HMRC) and I doubt that anyone would care what name was on those. The accounts office reference on them is the important thing so no need to re-issue if that hasn't changed.
-- Edited by Tom McClelland on Friday 14th of October 2011 08:01:42 AM
Hi Tom,
I wish! Contrary to what HMRC want, the cheque is very much alive and a popular way for businesses to pay their taxes.
Since 1.4.11, limited companies can no longer pay their CT by cheque (unless they use the bank/post office), but HMRC still accept them.
Thanks for the replies everyone. Its been a bit of muddle trying to work out what is happening with my client! Still not 100% sure! Anyways, long story short, HMRC have confirmed that you need to close down the sole trader PAYE scheme, issue P45's to the employees and then use these P45's to place them onto the new Ltd Co PAYE scheme.
