New small business

[mullet]

Hi pjclar02, I have tax codes as issued to previous employer and pension providers for 2010/11. I have P45 and P60s and thus I can accurately calculate my income to ensure I do not exceed LEL.

The distinction here is that these are the codes for those respective bodies to use. Whilst you can use the figures etc yourself to establish your personal tax position, that does not remove the responsibility from your employer (the company being a separate legal person from you) to operate PAYE (either procedures such as P45/P46 or actually making deductions) as appropriate.

Hi Mullet, I would confirm I am operating via a limited company. I do have P45 from previous employer. Are you telling me that I should have registered for PAYE and submitted a P14 / P35 by 19 May even if I did not exceed LEL for 2010/11?

It might not be so bad then. If the P45 has a "positive" tax code (i.e. ending in L, H, P or V and not prefixed K) and your income from the company is covered by that code ... then had the P45 been handed over (by yourself as an individual to yourself as a director of the company) there would not have been a loss of tax. The only failure (very minor) would have been the failure by the company to send in part 3 of the P45 to HMRC.

I'm probably going back to the old dark days, but way back then there was a requirement for every limited company to have a PAYE scheme, whether or not deductions were being made. HMRC would just keep them dormant until needed, but every director/company had to be recorded and linked. I don't know what happens now.

[robbob]

HMRC advise (per their website) is that if the employee of the company has either a second job or pension income then the company should register as an employer.
http://www.hmrc.gov.uk/paye/intro/register.htm#1

The full details of when you need to complete a P11 for an employee are contained on page 21 of the p49 booklet
http://www.hmrc.gov.uk/forms/p49.pdf
Full details are

If you are going to operate your payroll yourself you will
need to prepare and maintain a P11 Deductions Working
Sheet (or equivalent record) when:
• you pay your employee
– *£102, or more in any week
(NICs weekly LEL)
– *£442, or more in any month
(NICs monthly LEL), or
• your employee has given you a form P45 with a date
of leaving in the current tax year, or
• you have paid your employee and you have to operate
tax code BR or 0T in accordance with the P46
procedures, see pages 16 to 18, or
• you have paid your employee and HMRC has sent you
a tax code.

Finally here is confirmation that a P35 should be submitted for all companies where a P11 is kept for at least one employee during the year.
http://www.hmrc.gov.uk/paye/payroll/year-end/annual-return.htm#2

Practically speaking the only time you can normally get away with not setting up a scheme is when all employees are paid below the LEL AND they all don't have other income subject to paye AND none of them gives you a current year P45 when starting.

[missile]

I seems to be between a rock and a hard place.

I returned to work after recovering from a very serious injury. I was on IB until Nov 2010. I have claimed tax credits and declared I would be working part time earning LEL. I genuinely thought I did not need to register for PAYE as my total earnings would not exceed my personal tax allowance. I did complete and send page 3 of the P45 December 2010.

My tax code is possitive i.e. it ends with an "L"

What fine and or penalty can I expect for not registering for PAYE? What can / should I do?