PAYE creditor

Hollysan

Hello Everyone,

I wonder if any of you can help me with this one; I did the accounts for a new ltd co client for the first time last year, I was appointed by the new owners of the business. There was no PAYE creditor brought forward, but at the same time I was checking the state of play with PAYE, because although the book-keeping for the year I was working on was good, the PAYE administration in the past had been very suspect - the previous director was using out of date codes and not using the CD Rom properly. All very confusing but eventully (!) HMRC confirmed what was owing and it was paid. I completed the accounts and there was a small amount of PAYE owing at the year end.

Subsequently I discovered that there was more owing at last year end than I had realized - this due to all the confusion and the brought forward figure being wrong, I imagine. It was very difficult to get it to reconcile.

Obviously this needs to be reflected in the current accounts I am working on. Some of this money was still outstanding to HMRC at the end of the year, some had been paid.

Does anyone have any suggestions as to what I can do to ensure that I don't overstate, and that the creditor at this year end is correct? Should I do a prior year adjustment? I would really welcome some help as I have been going round in circles as to what to do with it!

Many thanks,

Hollysan

groundy

Just add the payment to HMRC that relates to a creditor b/fwd but omitted to wages on P&L

Hollysan

Thanks, Groundy, for replying, but if I follow what you mean, I can't add it to the P&L because it relates to previous year.

Hollysan

coojee

Hollysan wrote: »

Thanks, Groundy, for replying, but if I follow what you mean, I can't add it to the P&L because it relates to previous year.

Hollysan

If it's material in relation to the accounts as whole then you'd have to do a prior year adjustment but I don't think a PAYE creditor would be that material unless it had been unpaid for many years or they were making massive losses and wages was their only expense. As it's not material then you have to put it through this years books, you have no choice. It's got to go in somewhere either this year or last year. You can't put it in last year because it's not material enough to warrant a prior year adjustment so it has to go in this year.

Hollysan

Thanks Coojee, I think I will have to go back to last year's accounts and check what I did - I need to know whether the additional creditor was included in the P&L last year before I can decide what to do.

thanks anyway,

Hollysan

groundy

If it was included last year then surely it would be a creditor brought forward. I wouldn't worry about a prior year adjustment unless it has a material effect on the tax due.

Good luck, I hope you get it sorted.