Errors in ceased PAYE scheme

dyziodyzio New MemberRegistered, MAAT, AAT Licensed Accountant Posts: 31
Hello, I am after some advise on how to deal with the problem my client has. I tried to post this to licences members forum but it doesn't allow me...

I have just signed up a new client. It's a small limited company, with very little turnover. The director left previous accountants in Oct 2016, when the company stopped trading. I have taken over now, with a view to close PAYE scheme, de-register from VAT, do final accounts. Previous accountants continued to run payroll for the director up until Oct 2017. My client has sent me all payslips and I immediately used this info to file to HMRC with making the director a leaver, and ceasing the scheme.

Previous accountants run the payroll to the amount of £1771.00 for the director in this tax year. As the company ceased trading, the director didn't pay herself this salary, and in this tax year, she is in employment, earning just over £46k per year. The salary from her company wasn't taxed, so now she'll have to pay 40% on that.

My client has asked me now to reverse this payroll for the whole of the tax year, so she won't have to pay tax on salary she never took. How can I do that? The scheme is now closed. Please advise on how best to deal with it.

Thanks a lot.

Comments

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,356
    edited November 2017
    Just for clarity where did the £1,771 go? Into the director's loan account?

    Edit: if the director left their accountant in Oct 2016, how come they were still running the payroll for another year? Surely they would have billed the company for the work?

    (I have moved the thread to the Licensed Members area)
  • dyziodyzio New Member Registered, MAAT, AAT Licensed Accountant Posts: 31
    Client took all the money out when stopped trading, so it would be directors loan.
    As per my client, they were unreliable, never answered her queries and ignored requests to stop running payroll. They have run it for a full year, after client asked them to stop, without billing... She only found out they were still running it as I requested all her payslips and she found them in her spam...
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,356
    I take it you wrote to the previous accountants to ask for clearance before taking on your new client?
    What did they say?
  • dyziodyzio New Member Registered, MAAT, AAT Licensed Accountant Posts: 31
    No, I didn't write to previous accountant.
    The client provided all information she had, I verified the client for the money laundering regulations purposes, and started acting. The deadline for the 1st accounts to be submitted is coming close.

    Any advise on how to deal with the PAYE situation please?
  • dyziodyzio New Member Registered, MAAT, AAT Licensed Accountant Posts: 31
    Just to add, this is my first ever client who had previous accountant. I always thought professional clearance letter is not compulsory, am I wrong?
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,356
    Not compulsory but highly recommended.
    You only have your client's word that she instructed the accountant to stop running the payroll. The fact that she took the money doesn't help her case. I think it will be hard to rewrite history based on the few facts you have been given.
  • dyziodyzio New Member Registered, MAAT, AAT Licensed Accountant Posts: 31
    Thank you MarieNoelle.
    I will in future request clearance, I guess it makes life easier, lesson learned.
    MarieNoelle
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