how to: avoid penalties when the PAYE scheme closes

By Kevin Russell | 21 August 2014

avoid penalties when the PAYE scheme closes

Smaller churches and, not infrequently, local charities ‘hop’ in and out of being an employer for PAYE purposes. The following warning concerning the submission of Real Time Information (RTI) to HMRC will be important, if churches and charities in this situation are to avoid incurring a penalty. Even employers who are not yet operating RTI and whose scheme ceased in 2013/14 must still take action if they have not already done so, and telephone the HMRC employer helpline on 0300 200 3200.

Employers who no longer require their PAYE scheme can avoid notices and penalties by ensuring that they make their final submission correctly. From 2014/15, when making the Final Payment Submission (FPS) for the year, employers should:

  • run the final payroll
  • complete the boxes final submission because the scheme ceased and date the scheme ceased on their FPS for the pay period
  • enter a leaving date on each employee’s payroll record.

Employers who have already submitted final payroll information should complete the boxes 'final submission because scheme ceased' and 'date scheme ceased' on the Employer Payment Summary (EPS).

For the 2013/14 tax year, employers operating RTI who have already received an interim penalty warning letter, but stopped paying employees in the 2013/14 tax year, and have already submitted all their payroll information, will need to follow the EPS actions to avoid a penalty.

If any PAYE information is outstanding, employers will need to send an earlier year update to make the final submission for the year.

 

Image by Takashi Hososhima, used under Creative Commons Licence

Posted by Kevin Russell

Our Legal Eagle guru and Stewardship's Technical Director, Kevin constantly has his finger on the pulse of all things tax and charity law-related. His briefing papers for charities, churches and individuals are an invaluable resource on everything from VAT to Gift Aid. 

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