I am completing a small limited companies year end where they set the company up themselves and not had accountant or bookkeeper until now, when they have found they cannot file the year end records to HMRC.
They did not register to run payroll a HMRC scheme as they have said that they would like to pay a payroll amount of £ 589 for the 2011-12 tax year and therefore the tax and NI would be nil - which I agree is tax efficient.
I have a niggling doubt that as the Lower Earnings threshold was £102 for the 2011-12, this is the total amount that HMRC would accept before they expect year end figures to be submitted. I know the tax and NI is still nil if you pay £ 589 per month or £ 102 per week (£ 5,304 per year).
Can anyone confirm whether the £ 102 per week is the correct amount to use and if the client is adamant that they use £ 589 per month if this may cause a problem in the future. I have advised that they register for PAYE for the 2012-13 tax year as I believe this is best practice.
Any views or opinions would be greatly appreciated.
If they were to use £589/month when they haven't yet registered a PAYE scheme then I'd expect them to be fined for late filing of 2011/12 P35 and P14s, due by May 19th 2012, with a penalty of £100/month for late filing.
Please bear in mind that if the company was started in the middle of the year they can only use the NI threshold figures for the portion of the year that the company existed. So if they started in October they only get half a year's allowances. They can't use £102/week all the way back to April in that situation, so they would NOT get £5304 allowed.
Below £102/week they wouldn't have to file P35/P14 or register as an employer UNLESS one of the employees/directors also had another job elsewhere at the same time, in which case they should have registered as employer regardless of employee earnings level, and fines for late P35/P14 will now be due.
Employers who want to use time machines for tax efficiency will be very much inconvenienced after April 2013 when RTI comes in, which will pretty much put a stop to all this retrospective shenanigans.
Employers who want to use time machines for tax efficiency will be very much inconvenienced after April 2013 when RTI comes in, which will pretty much put a stop to all this retrospective shenanigans.
And hopefully make life a lot easier in the long run.
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Never buy black socks from a normal shop. They shaft you every time.
Employers who want to use time machines for tax efficiency will be very much inconvenienced after April 2013 when RTI comes in, which will pretty much put a stop to all this retrospective shenanigans.
And hopefully make life a lot easier in the long run.
Existing system seems pretty easy.
New system sounds like a nightmare where directors are being tyre levered into changes that were never intended for them.
The result will be eleven months of borrowing against the DLA / absolute minimum salary followed by one month of salary / dividend to balance everything when the director knows how much salary the company can afford to pay for the previous period.
Gets even more complex where directors are claiming tax credits as we discussed at length in another thread.
Of course, tax credits are the reason that this is being forced through in the half cocked form that it is so maybe we should be thankful the they are not being given the time or resources to implement the full everything goes to the Government and they give what they can't think of an excuse to keep back.
I'm really disappointed in this Government that just seems to be taking the bad idea's of the last bunch of incompetents and making them worse.
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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.
