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Post Info TOPIC: Directors overpaying NIC and 12pay
Redspottedhanky


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Directors overpaying NIC and 12pay
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Hi! I've introduced myself across on the newbies board, so I hope it's ok that I dive right in and ask some questions.

I have recently started bookkeeping for a small ltd company, VAT registered as high-ish turnover. I will be dealing with the payroll from the end of this month.

The company is very seasonal in work, and has up to 10 members of staff in the summer months (weekend work only), and two directors year round. The directors only started paying themselves late last year, and earnt £11,182. & £11,000 . The directors were dealing with the payroll themselves, using first RTI then 12pay from September.

They made a couple of mistakes: 

They ticked the box for employment allowance in the first instance, but then for some reason unticked it before they put through the final submission of 2016/2017. It is now ticked again, and I have ran an EPS, but only on Thursday.

They didn't mark the boxes to state they were directors in 12pay for the first 3/4 months of using the system, and so paid NICs. They then ticked it and didn't pay any for the last 3/4 months.

They had paid the last PAYE bill as it had come through, and now have received an underpaid bill of £1020 PAYE. On investigation on the HMRC only account, this is a bill from employment allowance- it doesn't give any more details than that.

They have recently been to see their accountants for the end of year, and he has told them they can claim back their NIC contributions. He double checked with someone in Payroll who confirmed this. However, they have finished the end of year on 12pay.

Firstly, will the fact that I have now marked the employment allowance box and ran an EPS remove the problem of The PAYE bill, or do I need to speak to HMRC about it? They definitely think theyhad the box ticked at some part of the year, as I had a conversation with them about it.

secondly, can they claim back the NICs, both employee and employer, and if so, how? I glanced through the HMRC website, but the way it was worded gave the impression that they should have been paying. 

I will happily speak to the accountants about it all, but I thought I would ask the advice on here as I like to know the why's and wherefore as well as the answers! Thanks for reading such a long story...



-- Edited by Redspottedhanky on Saturday 6th of May 2017 05:06:37 PM

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Claire
Tom McClelland


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To reclaim the NIC's they probably need to put through an EYU adjusting the NIC by the appropriate negative amount. This can be done with 12Pay or with the HMRC software.

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Redspottedhanky


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Thank you for a quick reply! So they can be reclaimed then? Is there anywhere recommendations on reading up on director pay/allowances, or is it just a case of letting 12pay do its job?

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Claire
Redspottedhanky


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Tom, I take it it's not a coincidence that the same name as yours is on the guide for EYU in 12pay?!

I'm just having a quick glance through the guide, so I can't tick the boxes to show that they are directors, but I can manually add up the amounts they each paid and put those in, before filing an EYU. Is that only the case for employees NIC, or is it also for employers? The amount that they paid out last year should be fully covered by the employment allowance.

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Claire
Shamus


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Hi Claire,

Well spotted. Tom's team wrote it and he used to own the company.

Basically anything that Tom says about the product (or for that matter Payroll) is pretty much treated here as gospel.

All the best,

Shaun.

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Shaun

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Cheshire


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I mentioned Tom in my response you your first post Claire. He is the MAN!!!!!


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Tom McClelland


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Redspottedhanky wrote:

Thank you for a quick reply! So they can be reclaimed then? Is there anywhere recommendations on reading up on director pay/allowances, or is it just a case of letting 12pay do its job?

Basically you can just let 12Pay do its job as long as you remember to inform 12Pay that an employee is a director from the outset, but the strange nature of director's NI means that it is a little bit complex to change retrospective errors such as forgetting to notify the software that the person was a director even if you spot the error before month 12.

After year end, the EYU message doesn't care if NI is director's NI or not (if I remember my life from 4 years ago correctly). Just put in the appropriate negative adjustment and that should automatically reflect through to the employer's PAYE/NI liability for that tax year, which in this case should mean a refund coming to the employer for that year.



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Redspottedhanky


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Thank you, I shall pop over on Monday and give that a try, any queries and I may be coming back to you I'm afraid! I'm very grateful for the help

So, one down, which is brilliant! Any ideas on the employment allowance issue? If not, I will call HMRC on Monday while I am there.

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Claire
Leger


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Redspottedhanky wrote:

secondly, can they claim back the NICs, both employee and employer, and if so, how? I glanced through the HMRC website, but the way it was worded gave the impression that they should have been paying. 

Hi Claire

You can't claim back the employee NIC's,  unless these have been overpaid.  You can claim the employer NIC back though, as they were entitled to employers allowance.   Going by what you said, it looks like HMRC have assumed that the Company wasn't claiming employers allowance because the box wasn't ticked when the final submission went through, so they will assume the full amount of employers NIC is due, hence the bill they've sent.



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