Q. I don’t feel my accountant has advised me very well I’ve been contracting for a year and taking a salary now he tells me I need to sort out PAYE if I take a salary and I’ve asked about NI but with not the best response. Therefore I’ve paid no NI for a year and am worried.
A. The fact your accountant has not advised you of this is concerning to say the least. Limited company contractors pay a tax efficient combination of salary and dividend, with salary generally above the threshold where National Insurance is payable. If the salary is above your personal tax allowance income tax will also be due.
So the bottom line is that, assuming your salary is above the relevant thresholds, you should have been paying tax and NI monthly or quarterly.
Regardless of tax payments you should have been registered with HMRC as submissions (RTI) are made on a monthly basis. As a director you will also have a legal requirement to complete a personal tax return; the deadline of 31st January 2015 fast approaching.
I recommend you immediately contact another accountant to review your tax position and advise the best course of action. The accountant can speak to HMRC on your behalf to resolve this matter. It may well be that a liability is due, which you could pay as a one off or arrange a payment plan with HMRC.
This answer was provided by Paul Kennedy, Senior Accountant at Qdos Accounting.