Correcting error in PAYE slips

[FreddieP]

Hello,

I own a tiny Ltd. company and I pay myself a salary on PAYE. I have an accountant who only does the PAYE slips for me. They do not have anything else to do with my company.

I do not pay myself a regular salary. I pay myself in accordance with what I make with my company. So I normally tell the accountant to change the amount on the PAYE accordingly.

In October 2015 I asked them to increase the amount of my pay as I thought I would be getting more money with a contract. It did not happen and I paid myself less but I forgot to the tell the accountant to lower the amount of my pay on the PAYE slip until this month when I received a letter from HMRC claiming unpaid tax on PAYE. I told the accountant to lower the amount of my pay from February.

I do not know what to do now. If I pay the PAYE tax I would be paying tax on money I did not earn and I am short of money too.

Is it possible to amend and backdate the PAYE slips and tell HMRC it was a mistake? Will they accept it?
I am able to prove to them, with my company and personal bank statements, how much I actually paid myself.

Thanks

[jpcentral]

You have two options which I can immediately see:

1. Since we are still in the same PAYE year you could take less in February and March to make the overall annual total correct. This may not work, depending on the amounts involved. If you can do this, the tax position will sort itself out by the end of the year and a letter to HMRC explaining the position should suffice.

2. Under the RTI system it is theoretically possible to retrospectively amend payroll. HMRC should pick up the amendment on the next RTI submission. I say "theoretically" because we find that the various departments don't necessarily see the same information so you might find the debt management team are still pursuing you.

Question: Why are you paying yourself in this way? I don't know your circumstances but it does sound as if a combination of a lower salary and dividends will be more tax efficient.

I suggest you have a word with an accountant who can advise you.