Forum

• # 111444
• Sun 18 Oct 2015 11:45 AM

Hi

I have just acquired a new client whose small private limited company started trading 6 months ago. I ran the payroll at the end of September but have since discovered that casual wages under the NIC and Income Tax thresholds were paid to the Director and staff. What is the most appropriate action for me to take in these circumstances?

Regards

John

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• # 111445
• Sun 18 Oct 2015 02:34 PM

Hi John,

When did the company register for PAYE?

Marilyn

• A clever person solves a problem.

  A wise person avoids it.

  Albert Enstein

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• # 111446
• Sun 18 Oct 2015 02:49 PM

Hi Marilyn

The company registered for PAYE in September 2015

Regards

John

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• # 111447
• Sun 18 Oct 2015 03:22 PM

Hi John,

Oops! this is a problem!

I don't know if this would cause problems with HMRC, but can't you back process the payroll for previous months?

I would be more inclined to back process the pay from day one of the Ltd Co. and send the FPS after completing all the back pay instead of sending the FPS at the end of each monthly pay period.

Of course this may not be possible now if you have setup the payroll from Sept as I don't know what software you are using.

As the employees were paid under the NI & Tax thresholds they are not the problem but the director should have been on the payroll from day one.

Marilyn

• A clever person solves a problem.

  A wise person avoids it.

  Albert Enstein

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• # 111448
• Sun 18 Oct 2015 04:10 PM

Hi Marilyn

Thank you for your helpful advice.

I am using QBO for this client. I cannot see how I can back date the payroll submissions for each of the missing months. Just for clarification the Director's pay and employees for the first 5 months is less than the NI and Income tax Thresholds. I may have to contact HMRC.   

Regards

John

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• # 111449
• Sun 18 Oct 2015 10:50 PM

MM Bookkeeping said:

Hi John,

...

As the employees were paid under the NI & Tax thresholds they are not the problem but the director should have been on the payroll from day one.

Marilyn

”

 Hi John,

I don't necessarily agree with this. Could the amounts paid to directors not be handled through a directors loan account for the earlier payments and then, if necessary, a single payment be put through payroll later. As long as directors pay handled as is normal for a director it will not generate NIC. I don't know how the tax would then look as I don't know the code.

Dave

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• # 111452
• Mon 19 Oct 2015 07:22 AM

Hi,

Yes the directors pay could be handled as a loan initially but I was trying to assist in getting the payroll done properly from the Ltd Co start date.

I don't know how QBO works but the two payroll software programs I use allow you to back process to any previous periods within the tax year you are working on.

This allows you to amend any payroll for the relevant periods and then submit an FPS and/or EPS (whichever is relevant at the time).

However, in your case John this may mean setting up the payroll again with the actual start date of business and employees to allow you to do this as I am assuming you have setup the software with the dates you officially started. Unless you can amend the dates without starting all over again?

Marilyn

• A clever person solves a problem.

  A wise person avoids it.

  Albert Enstein

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• # 111489
• Fri 23 Oct 2015 04:29 PM

Dear Marilyn and Dave

Thank you for your helpful responses in relation to my query. I have managed with the support of QBO staff to run the payroll back to April 2015. I will enter all 5 of the outstanding payrolls and submit them to HMRC on Monday. I am just wondering what the response will be from HMRC?

Once again thank you.

John

www.jrbbookkeepingservices.co.uk

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• # 111491
• Fri 23 Oct 2015 08:05 PM

Hi John,

Thank you for letting us know you have resolved the problem.

This is what I thought could be done as I know I can do that with my payroll software and have done it without any problems from HMRC.

HMRC probably won't get round to responding as they are not known for being the quickest to respond to anything these days!

Marilyn

• A clever person solves a problem.

  A wise person avoids it.

  Albert Enstein

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