From April 2013, HMRC will be introducing a new way of reporting PAYE meaning employers will be legally required to report PAYE in real time.
This means that information about all PAYE payments needs to be submitted to HMRC online each time a payment is made as part of the payroll process, rather than at the end of the year as they are now.
The service will now require employers to send in monthly details of how much each employee has been paid and how much tax has been deducted under the PAYE system, in contrast to the previous system of sending information in once a year.
This change in policy will affect the cash flow of the company as it will effectively prevent a company from spreading payments across the tax year and instead HMRC will be able to issue demands for payment quicker.
When we provide advice to companies, several clients have advised that they have not submitted their PAYE returns as they were unable to pay and were scared of a demand being issued. Whilst we do not condone this attitude it is evident why some directors choose this approach.
Any company who is struggling financially could be forced into an insolvent position by the presentation of these demands and therefore it is equally important that all of the company affairs are brought into order at the same time.
Therefore it is important that if you are concerned about your company and the effect that these changes will mean, you should seek professional advice from your accountant or an Insolvency Practitioner.
DCA Business Recovery provide free Insolvency advice via our Freephone Helpline on 0800 066 2544.
For more information contact us or see HMRC’s guide at: www.hmrc.gov.uk/rti/index.htm