Year End Payroll filing...BUT...

knowledgeispower
knowledgeispower Registered Posts: 32 New contributor ?
Hi there,
I have been approached by a potential client who is a director of a ltd company and was only set up last october. he has been contracting but he had no accountant. if I take him on now, is it my responsibility to file his previous pays/RTI (if it is how do I deal with it??)
or do i just set him up as new client from today onwards?
thanks in advance

V

Comments

  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Does the client want you to do the payroll year end? There should be something in your engagement letter about previous years.
  • knowledgeispower
    knowledgeispower Registered Posts: 32 New contributor ?
    Thanks Gem7321. he has no idea what he wants or needs doing and I haven't come across this in my 1 year of (fresh) practice either. he said he wanted to get salary below LEL but I said I couldn't take him on like that because he falls into high risk under IR35. so he's happy to do normal salary going forward.
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Has he been paying himself a monthly salary since October? If it was up to the LEL then there would be no reporting requirement. You may need to adjust the salary going forward to take into account a deemed payment under the personal service company legislation.
  • knowledgeispower
    knowledgeispower Registered Posts: 32 New contributor ?
    Thank you MarieNoelle; just want to double check if I'm understanding this, if he paid himself a salary under LEL, he can still 'catch up' with NI and tax payments by deemed payment under personal service company legislation at year end (19h april) or you said adjust salary going forward (how do i do that) or which one is easier? many thanks :-)
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    My understanding is that now the year end has passed there isn't much you can do unless register now for PAYE and file an Earlier Year Update for the previous year - but this may incur late filing penalties.
    If not filing for the previous year there will very probably be a deemed payment calculation and NIC to pay for the tax year just gone.

    Going forward it makes sense to pay a higher salary to avoid this.
  • knowledgeispower
    knowledgeispower Registered Posts: 32 New contributor ?
    ok great thanks for clarifying. is the deemed payment calculation voluntary (can it be voluntary)or it's something HMRC rules based on SA and Corp tax?
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Just to add to my comments earlier, if you know for sure a deemed payment calculation is required it should have been reported by the 5th April via an FPS. So in any case you need a payroll scheme and file an EYU for that period. A provisional calculation is accepted at this stage (final calculations and payment by the 31st January the following year.)

    Regarding calculations, reporting and payment, HMRC has published detailed guidance here.

    I don't think the client can avoid late filing penalties. You may also want to consider whether you are best placed to advise him if you are still unsure about this and new to practice. A mentor or a local experienced accountant may agree to review your work?

    Best of luck!
  • DorotaD
    DorotaD Registered Posts: 11
    What makes you think he will fall under IR35? That makes huge difference, and lot's of contractors operate outside IR35.
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