I've just had one of our clients on the phone, bearing in mind he runs three businesses and has done for many years. He asked if there is a form he can fill in to claim back PAYE due to two of his employees having the wrong tax code of BR (recently updated to 944L). I explained that if HMRC believe these two employees had been paying too much tax then they usually issue a cheque to the employee by post.
He said that he is going to have to tell them when they receive it that its his money. I have explained many times to him that the PAYE he has paid is just what he has COLLECTED from his employees pay and that this is THEIR contribution. It is not physically coming out of his business and that the gross amount he agrees with his staff is all of THEIR money, although he only pays them the net amount, the rest of THEIR money gets paid to HMRC for tax and NI.
He just can't seem to understand this.
Is there any easy to understand information on this that I could send to him on employing people. I've had a look on the HMRC website but I can't find any information that would be easy for him to digest.
Its just becoming a bit exhausting having to explain over and over again and he is now saying that he has always paid his staff the gross amount not the net amount which just confuses things even more. If he has paid them the gross amount, this would be his problem not his employees wouldn't it?
Has he really paid the employees the gross amount?? (That should be evident from the bank rec? assuming he paid by bacs or cheque)
I would start by establishing whether he has paid his employees net or gross before doing anything else; as whether he has or not depends on what needs to happen next.
According to one of my colleagues he hasn't paid any PAYE (this is what he told her) however we are looking into whatever records we have to see if he has and also to see if he has made any payments to employees by cheque as he usually pays them by cash.
Hi as we have little of his records and he pays his staff by cash I am unable to find out if he has paid them gross. He says he just wants to leave it as it is i.e staff paid gross, no PAYE paid to HMRC and has told me to forget the whole conversation.
With an client like this, who seems to have no knowledge of what being an employer entails and no interest in finding out, no knowledge of employment law and again no interest in finding out, who also gives you information for payroll such as hours to put through then a year later say its been wrong hours for the whole year, tells you that staff take large amounts of leave and in one email gives you the start date and finish date of their leave and then a few months later it was different dates and different length of leave, would this be a client you would drop?
Although he does give me the information I ask for SOMETIMES, the information is always wrong, or he forgets he replied to me and sends another email with conflicting hours, dates etc already given.
His payrolls take up the majority of my time which takes time from others payrolls. He refuses to come in to see us, he refuses to take advice, he refuses to let us help him to bring his payroll accurately up to date which makes it harder for me as his payroll records are a mess, he also refuses to educate himself on PAYE and employment law for his own protection but also to enable us to complete his payrolls more easier.
Are you submitting this P35? Is this not priving to HMRC that he owes it, regardless of whether he pays it? He sounds like a nightmare, I hope you are getting paid for every minute you spend on it.. that usually makes them see what a mess they are creating or at least makes them take their idiocy to someone else!
I submitted his P35 on the assumption that he had paid as we didn't receive back his signed P35 to let us know if this was correct or not. So hopefully HMRC will swoop soon.
We use Iris to record our time spent on his payrolls however he has unpaid invoices dating back to 2011 and are amounting to over £1000 now :/
With regards to MLRO I have spoken to our Director about this client and he has said that he's one of the clients we should really drop, never mentioned reporting anything though, however this hasn't happened and we are still acting as his agent. Also, another reason I would want to avoid is that it's basically Thai massage with women from Thailand working there but having been on his websites I can see mattresses on the floor and it all just looks a bit dodgy to me :/
If they are thin mattresses on the floor then its likely to be traditional Thai massage where part of it involves them walking on you (Thai massage shouldn't involve a table).
If they are lilo's thats a soapy massage which is the dodgy one but still does not necessarily involve sex.
The likelihood is that you are right but just wanted to say that your assumption is not necessarily correct and that alone should not without further evidence detract you from working with the client. (Sounds as though there are plenty of other reasons for that espechially the loan from your company to the client (#1) which will effect your objectivity).
kind regards,
Shaun.
(#1) Overdue fee's are loans and making loans to clients breaches ethical guidelines.
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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.
(Sounds as though there are plenty of other reasons for that espechially the loan from your company to the client (#1) which will effect your objectivity).
(#1) Overdue fee's are loans and making loans to clients breaches ethical guidelines.
Thanks Shaun! This is a very interesting point. Do you have any information I could read/access on this? I have completed professional ethics in my AAT studies and never come across this one before. It seems then that alot of our clients have loans with us! What would the way to go with these? We have passed some of them onto debt collection agencies but some are still just sitting there?
The ACCA rules (don't switch off yet, AAT gets a mention in a min) are basically an extended interpretation of the IFAC rules of professional conduct which interprets overdue fee's as a loan to the client creating a self interest threat to the practitioners objectivity.
Both the issue and strength of the IFAC code is that it is principles rather than rules based and it is down to the professional bodies to relay to their members their interpretations of what is implied by the rules.
This document from Open Tuition if from the Audit syllabus so does have a bit of a list in that direction but most of the underlying principles effect not just auditors but all who adhere to the IFAC code which bodies such as ACCA, CIMA, AAT, IFA, etc. have all signed up to.
Its worth a good read from start to finish (only 11 pages and all interesting, thought provoking reading) but you could also just do a search on loans, overdue fee's, etc.
Passing the loan onto a debt collection agency still poses the issue of whether the debt has been passed on with or without recourse as where with recourse the effect is that you have taken out a loan secured against a loan.
As I say, have a read and I look forwards to chatting later,
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 would say it time to drop him before he's really in trouble with the HMRC as no doubt he will blame your company that you work for for not helping him. Sometimes clients just can't be helped. Hope HMRC catch up with him.
I would document your queries/concerns with him - even if its only by way of email. I do this when I dont get answers, often focuses their minds but I understand thats not always the case, but its proof if you ever need it that you have done everything that is expected of you by him/HMRC etc. Sounds like he doesnt need anyone to do his payroll as he just makes it up as he goes along. Hope you get paid and HMRC catch up with him soon
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for your replies everyone. This client has now been struck off Companies House because his accounts haven't been filed. He's blaming us yet says he is too busy to come and see us to sort it out. To be honest I think its getting very close to a drop kick!
