Employers who have not used their schemes will receive letters explaining that their PAYE schemes have been closed.
HMRC has said that any PAYE schemes opened after April 5 this year will be shut down automatically where the employer has not sent any PAYE returns or paid HMRC within four months of the scheme being set up. Schemes registered as annual schemes will not be closed by this process.
HMRC’s Director General for Personal Tax, Ruth Owen, said: “Closing schemes that are no longer needed is really important for businesses and for HMRC as it means that HMRC won’t waste employers’ or taxpayers’ time and money by needlessly pursuing returns or debts when in fact none are due.
“Since April, employers or agents (acting on behalf of their clients) who have set up PAYE schemes that are no longer needed can easily close the scheme by reporting this on their final submission. This new process helps further as it means we can identify and remove unnecessary schemes earlier.”
From October 2013, PAYE schemes will automatically be closed where
- No real time PAYE submissions have been made
- No payments have been made to HMRC
- The employer is not an annual payer
- There is no evidence that the employer wants to claim Construction Industry Scheme deductions
- The employer has not received an advance from HMRC
- There have been no periods of Construction Industry liability
- There is no evidence that the employer has any employees
- There is no evidence that Class 1A NIC is due.
Real Time Information
More than 1.69 million employer PAYE schemes, covering over 46 million individual records, are already reporting in real time (RTI) since the launch of new reporting requirements in April.
RTI was heralded as the the biggest change to the PAYE system in over 70 years. It means employers and pension providers report deductions and payments they make to HMRC at the time they are made, rather than after the end of the tax year.
The vast majority of employers are now reporting PAYE information in real time. HMRC believes a large number of PAYE schemes can be closed, for example because they no longer have any employees linked to them.
There are some employers who are required to operate a PAYE scheme for expenses and benefits or are required to submit Construction Industry Scheme (CIS) returns. In this case, employers should either submit a nil Employer Payment Summary (EPS) each month or contact HMRC to change the scheme to annual, and then send HMRC a nil EPS once a year.
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Susie Hughes © Shout99 2013