HMRC will be closing inactive PAYE schemes
HMRC has published a note on its website warning employers of the impending closure of inactive PAYE schemes. This applies only to schemes opened on or after 6 April 2013 which have been inactive for more than 120 days and does not apply to schemes registered as annual schemes.
We have been considering the possible consequences of this for some businesses and have concluded that there may be trouble ahead. Forewarned is forearmed?
After the problems people had getting schemes registered as annual earlier this year (no confirmations were sent out), some employers and agents may still not know whether their scheme is annual or not, and may still be submitting nil EPS every month to be on the safe side. Note that the phone number to call for clarification is the employer payment helpline, not just the employer helpline, although it can take a while to get an answer.
Many agents and employers, especially where PAYE schemes exist either solely for the purpose of applying for a P11D dispensation or solely to report benefits, still haven't realised that they should either have transferred to Annual Schemes or to Pseudo schemes. For more help on these, see our series of RTI Helpsheets and in particular RTI Helpsheet 4: Low-paid employees or no payments made to employees
The full text of HMRC’s message is:
From 28 October 2013 HM Revenue & Customs (HMRC) will be issuing letters (RTI206) to employers to advise that, because our records indicate that they have not operated PAYE or paid any subcontractors, we have automatically closed the PAYE scheme due to inactivity.
The letters are generated following an automated review of our records. The benefit of this approach is that:
- HMRC identify that no returns are due at a much earlier point
- it removes the obligation to make real time submissions and subsequent requests for both returns and payment
- it removes an unnecessary burden on employers and the additional cost to HMRC of maintaining and administrating their record on our systems
For more information on the criteria HMRC apply for closing a scheme please see guidance on Automatic cancellation of a PAYE Scheme.