|
|
I know I am not qualified to provide advice on Payroll and am not looking to do so. However I am studying the payroll qualification and I have a friend who will be looking for me to do their payroll once I am qualified. They have posed a question that I hoped someone could help point them in the correct direction so that they can find the answer.
They are a director of a limited company and have been for just over a year. They have assumed that they do not need to do PAYE and can be treated as self employed so have made no tax or NI payments, PAYE, P60s etc for 10/11. I believe because they are a company director they should have done PAYE and cannot leave the tax to their annual self assessment? I hope for their sake there is something I don’t know about and that they can use the self assessment but everything I have looked at points to PAYE. I know the money they take from the business is low, but I believe it is over 8,500 a year. Can anyone help?
Thank you.
|
|
- Member PM.Dip
- Practice Licence
- 58 posts
|
In my opinion (and I stand to be corrected) they can be either but ... if (as seems to be the case) they are working full time for the one company I think they would be deemed to be employed in the eyes of HMRC, falling foul of IR35 regulations and therefore should be paid through PAYE so that tax and NIC is deducted at source and more importantly employers NIC are paid.
Of course many directors who are also shareholders take a low wage and then take dividends from the profits (if there are any of course).
As you are not qualified to advise and there really is not enough information available, I would suggest they ask their accountant for some Tax advice.
Hope this helps
|
|
|
Hi KLA
Just to Affirm what Anne has said you should not under any circumstances be offering advice if you do not have the relevant qualifications which in this case is self assessment and payroll.
Advise them to speak to their accountant or find another more qulaified ICB member locally that can help you.
Anne as there was not enough detail if I was you I would not have given the advice you did as it has the potentential to be incorrect. I would have just posted the 2nd to last line.
Kind regards
Stuart
Edited at 08 Jun 2011 10:48 AM GMT
|
|
- Fellow
- Practice Licence
- 36 posts
|
I would agree with annepebo and Stuart - but also needed to add another important point.
If the person was to be deemed to be self employed by HMRC (and I believe it is they who have the final say on this matter) - then your friend had no more than 30 days from commencing with any business activity in her self employed status - including marketing the business - in which to notify HMRC that they are self employed. I looked into this when setting up my company and making the decisions on which routes to take.
If you fail to register as self employed within this 30 day period there are also fines that HMRC can impose.
HMRC also have an employed or self employed reckoner on their website called the Employment Status Indicator. Another good site is the Direct Gov website has a whole section on Employed or Self Employed and talks about what they need to do. But the best course of action would be to speak with their accountant.
Just to reiterate you would need to have the self assessment qualification to give advice on the self employed items and Payroll qualification to discuss PAYE with them.
Edited at 08 Jun 2011 10:59 AM GMT
Edited at 08 Jun 2011 11:05 AM GMT
Edited at 08 Jun 2011 11:07 AM GMT
Edited at 08 Jun 2011 11:09 AM GMT
|
|
- Member PM.Dip
- Practice Licence
- 58 posts
|
Fair point Stuart
|
|
|
Hi Nicki
You say you have to register within 30 days of becoming self employed when did this change as far as I am aware you have 3 months to resiter as self employed after that a £100.00 penalty can be charged however this is at the discrection of the inspector.
Nicki you should also be aware that you are not covered to give payroll advice by the ICB until you have the pm.dip after your name.
Kind regards
Stuart
|
|
- Fellow
- Practice Licence
- 36 posts
|
Hi Stuart
I am sorry if I gave payroll advice but did not intend to. I have sat the payroll exam and am waiting for the results.
I have previously checked my self employed clients on the ready reckoners for my own piece of mind.
I was advised of the 30 day deadline on the Newly Self Employed Registration line, when I called to discuss setting up my own business in April of this year.
The penalty I was advised was £100 and it was at the discretion of the inspectors, but I was strongly advised that I should register in the 30 day period. I do not know, when any changes were made to this.
I was advised that within 30 days of the first trading activity commencing, self employed people needed to be registered for payment of NHI.
In my opinion, in these leaner times, if we can avoid penalties where we can all the better.
Kind regards
Nicki
Edited at 08 Jun 2011 12:30 PM GMT
|
|
|
Hi Nicki
I agree sooner is always better to avoid penalties where HMRC are concerned.
The reason I was asking when it changed as I work for large practice an no one here was aware it had changed from the 3 months I will get onto the tax department and get them to do some digging around as if it has changed we will need to send out an update bulletin.
Fingers crossed for your payroll exam. Is the payroll one still done as a home based assessment rather than the centre based ones that give you instant results.
Cheers
Stuart
|
|
|
www.hmrc.gov.uk/sa/self-emp.htm
states that if you become self employed you must register immediatley otherwise you may be liable to penalty.
Cheers
Liz
|
|
|
Payroll exam still home based
bit aggrevated to be honest as I personally didnt realise I wouldnt automatically get PM dip after my name when I passed - you need to upgrade your membership for £97.00 first. I'm skint just now and have a client begging me to do their payroll 
|
|
- Member PM.Dip
- Practice Licence
- 481 posts
|
Liz D said:
“Payroll exam still home based
bit aggrevated to be honest as I personally didnt realise I wouldnt automatically get PM dip after my name when I passed - you need to upgrade your membership for £97.00 first. I'm skint just now and have a client begging me to do their payroll ”
There's nothing to stop you doing it. You are qualified and so your PI insurance will cover you. Just means you can't have the letters after your name. I also thought you were allowed to pay a proportion of the upgrade till when your current membership runs out. Give them a phone.
|
|
|
Thanks Peasie - I'll let you know
But I dont think you are allowed to practice unless you have the letters after your name as your practice licence wont cover it.......
|
|
- Member PM.Dip
- Practice Licence
- 481 posts
|
I was hoping the ICB may have seen this thread and gave an opinion.
My view is the ICB only want their members doing work they're competent to do. Passing the exam proved you're competent to do payroll. Paying the extra money would allow you to use the letters after your name to let others know you are competent but not paying the money doesn't make you less competent.
I have passed my payroll exam but don't intend paying for the upgrade until I have passed my bookkeeping manual level III and then I'll pay for both at the same time (which will hopefully be in the next month if successful).
|
|
|
Good Luck with Level III - let us know how you get on........
Im still swithering as to whether I want it or not.......
Liz
|
|
|
Hi Peasie and Liz
The subject of passing the exam and not paying the upgrade recently came out and I was surprised by the reply I got from the ICB on the subject.
Like you Peasie I assumed that once you passed and exam then you could offer the services i.e. pass the payroll exam the offer payroll services however I was told this is not the case as far as the ICB are concerned. They say you should not undertake any work that they have not deignated you for as they do not cover you for it. They will confirm if any issue arises that you had passed the exam.
As far as your PI cover goes I have no idea where you would stand on this as to whether they purely cover you for the areas the ICB sign off on.
Like you hopefully we can get a ruling from the ICB to totally clarify the situation.
Cheers
Stuart
|
|
- Member PM.Dip
- Practice Licence
- 481 posts
|
So passing the exam doesn't prove you're competent to do payroll but paying the money for the upgrade does? It's not going to matter too much in my case as I won't be advertising for any work until I have passed level III manual and computerised.
Or are they going to now turn round and say that the payroll I have been doing for the family business for the past 25 years I am no longer allowed to do? Is it they don't want people advertising they offer payroll services or the just don't want people doing payroll until they have paid for the upgrade.
I wish they would come up with rules where there is no room afor ambiguity or misunderstanding.
EDIT : and another thing about this forum. Any chance of getting a "preview post" bit? Might actually save on some squabbles as it gives people a chance to read a post properly before firing it off.
Edited at 14 Jun 2011 12:28 AM GMT
|
|
- Member PM.Dip
- Practice Licence
- 194 posts
|
Peasie said:
“So passing the exam doesn't prove you're competent to do payroll but paying the money for the upgrade does? "
Quite.
I don't think that you will have to pay the full upgrade price....depends on when your current level of membership runs out. I recently passed the level 2 computerised and upgraded to have CB.Cert and because my current Associate membership doesn't run out until July 2012 they charged me pro-rata so it only cost me £15.00
Pauline
|
