Continuous employment

New partnership is purchasing a business from a sole trader. The sole trader currently employs 5 members of staff and they will all continue to work for the new partnership (ie my clients). The Sole trader's bookkeeper is saying that she doesn't need to issue P45s for the staff as they're in continuous employment but I'm quite sure she's wrong and that the partnership should have its own PAYE scheme and set them up as new starters (although I'm aware that under TUPE they are entitled to rights as if it was one continuous employment). Please can someone confirm I've got this right!


  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Think this applies: For successions, where a new reference is required:
    • Transfer the payroll records to the new employer reference.
    • Under the old employer reference send in an FPS with leaving details, including the year to date pay and tax figures. You do not need to prepare forms P45 for employees affected by this change, although you will need to ensure they are provided details of their total pay and deductions up to the date the scheme succeeded.
    • Under the new employer reference send an FPS restarting the year to date figures from zero.
    • Include the full starting details for the each employee on the FPS for the new reference, use:
      • the start date for the new payroll
      • starter declaration C for codes 0T, BR or codes starting with a D prefix
      • starter declaration B for any other code
    • On your payroll you must:
      • work out and deduct PAYE tax and NICs from any payments you make to the transferred employees from the date the scheme succeeded
      • use the pay and tax details from the old employer reference if you're operating a cumulative tax code
    • If you are also sending expenses and benefits information (forms P11D, P11D(b) and P9D) at the end of the tax year, these must contain the total information to be reported for both employer references.
    Note: The last FPS from the old employer reference must be submitted before the first FPS for the new employer reference. If you are unable to do this you will need to contact HMRC's Employer Helpline.
    HMRC's Employer Helpline
    For successions where a new reference is not required
    Continue to operate PAYE and report payroll information under the existing employer reference.
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