By Lyndsey Hall
From October 28th HMRC will be informing employers with Pay As You Earn (PAYE) schemes that have been inactive for 120 days that their PAYE scheme has been shut down. Any schemes that were opened after April 5th this year and where the employer has not sent any PAYE returns or paid the Revenue within four months of the scheme being set up will be automatically shut down. Only schemes registered as annual schemes will not be affected.
According to HMRC director general for personal tax, Ruth Owen, closing schemes that are no longer needed is necessary to avoid HMRC wasting employers’ and taxpayers’ time and money, pursuing non existent debts. Employers and agents can also close their own schemes by reporting that they are no longer required on their final submission, making the process of identifying and closing unnecessary schemes even easier for HMRC.
According to Accounting Web, PAYE schemes will automatically be closed where:
- no real time PAYE submissions have been made
- no payments have been made to HMRC
- the employer is not an annual payer
- there is no evidence that the employer wants to claim CIS deductions
- the employer has not received an advance from HMRC
- there have been no periods of construction industry liability
- there is no evidence that the employer has any employees
- there is no evidence that Class 1A NIC is due
However, there are a few circumstances in which employers are expected to operate a PAYE scheme without any employees linked to it, such as for expenses and benefits, or submitting Construction Industry Scheme (CIS) returns. According to Accounting Web, in this case, employers should either submit a nil Employer Payment Summary (EPS) each month or contact HMRC to change the scheme to annual, and then send HMRC a nil EPS once a year.
What do you think about the new PAYE scheme? Has it made payroll easier for your business? Let us know your thoughts in the Comments.
Schedule 56: PAYE Late Payment Penalties