I'm wondering if anyone can enlighten me as I've taken on a bit of a mess with my new job, trying to get up to speed with AE and now totally confused.
We've got a client (who has missed their staging date). There are 2 directors on the payroll, both are shareholders (though not equal - not sure if that's relevant) and now that I've brought it to the attention of my boss, he's spoken to the Directors (who had apparently ignored all previous correspondence from TPR) and at least one of them is keen to join a scheme. I thought that they were maybe exempt because neither of them have written employment contracts. However I believe they both work within the business, which is a retail shop, so wouldn't that make them 'workers' anyway, and therefore having AE duties?
I think the rest of our payroll clients are pretty straightforward, and the next isn't due to stage until November, thank goodness, so I'm trying to get everything in place now.
As far as our IFA & pensions company have told us (our staging date is this month so I'm in the thick of it) Myself & the two directors are exempt from being automatically enrolled as we don't earn enough (we take a basic salary and the rest in dividends) - We do however have the choice to opt into the scheme.
They are not workers so you just need to go into the Pension Regulator site, login with details on the letter from TPR and follow the questions and no scheme will be required. Submit and they have completed their obligations. If he wants a pension then he or the company can set up one up but there would be no requirement under AE.
They are not workers so you just need to go into the Pension Regulator site, login with details on the letter from TPR and follow the questions and no scheme will be required. Submit and they have completed their obligations. If he wants a pension then he or the company can set up one up but there would be no requirement under AE.
Isn't that what Pictures said?
__________________
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
Taxadviser has mentioned the importance of going onto tpr and informing them you are not setting a scheme up. Miss this and you will end up getting fined, even if you have no workers in a scheme.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
We didn't have to do that as we are setting a scheme up due to having approx. 20 workers who do have to be auto enrolled so yes, taxadvisor's advice was needed.
This point has already been made and I have commented on it - so there really was no need to make it again.
Although in the OPs case there was an indication that they might want to set up a scheme anyway, albeit late. So they could do it either way - set one up, or show they have no obligation and set one up later.
Christine - there is some limited guidance and Q&As on the Pension regs site which you might wish to take a look at. Your client should probably speak to an IFA and get some advise about which direction to go in for pensions anyway eg SIPPS (Im assuming these are still available) to ascertain which is the best route in their own particular circumstances.
__________________
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
Hi, sorry I thought I had posted further up but it doesn't appear so must not have got around to pressing the submit button lol.
Thanks for the replies. According to TPR (slides from one of their recordings) if there are 2 directors with employment contracts then they come under AE. It's the employment contract bit that I'm getting hung up on. I'm new to all this and don't know whether they would be deemed to have contracts (dotting i's and crossing t's doesn't seem to be a strong point in this practice :/) They are both on the payroll (no other employees) and earning above the LEL. I will suggest to my boss (the accountant) they contact TPR to confirm their position themselves, and to take advice from an IFA as you suggest, Joanne.
And thanks for the reminder about informing of no duties. We do have one other who has gone past his staging date but is sole director, and no idea if he has informed TPR or not. I appear to have inherited a right old mess but it will be fun sorting it out :)
Hi Christina
I am not sure what TPR's intention is on this one, but if your clients are thinking of creating a written contract there are some implications, such as then losing the right to NMW exemption amongst other things - this would probably cause a small/new business a lot of issues as often shareholder/directors work more hours than they would ever get a wage for, and this could no longer be the case. I would suggest they get some tax and legal advice if they are thinking of going down this route, although firstly I would be putting out an email to TPR to perhaps get some written clarification on this.
Others may be able to shed more light on this. There is case law out there too.
__________________
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
I agree with Joanne that contracts could cause NMW issues. Why are you concerned about the lack of contracts?
Why don't you login to TPR as I suggested and go through the questions - I just don't think the company needs a scheme if only 2 Directors with no contracts. No need to overthink this one. Also login for the one whose staging date has passed, it takes 5 mins to complete.
Hi, the issue with this one Hannah is that one of them wants to sling some funds into a pension, and thought they might he down the AE route, although I've suggested that route might jot be the most appropriate. So it's not a straight forward opt out. Although maybe better to opt out to avoid fines and opt back in later if this route is proved to be a viable option.
__________________
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 joanne, I hasn't thought about the implications of nmw. That kind of clears the muddy waters a little.
TaxAdviser/Hannah? I do have a tendency to get bogged down in the detail and over,think things. I have read quite a lot of tpr website over the last few weeks. I'm still finding my feet in this job, my predecessor left several weeks before I started so I'm on a huge learning curve. Appreciate your input
If a Director wants a scheme then the company could set up a scheme or he could make payments to a personal pension, both would be tax efficient. There is no need to do this through AE and he would have more choice of schemes and funds rather than just choosing one that is compliant. Since the Director is not a worker then he is not even eligible so the company is not compelled to set up a scheme for him under AE.
