Use It or Lose It

HMRC automatically closing down redundant PAYE schemes

From 28 October 2013 HMRC will be issuing letters (RTI206) to employers to advise that they have automatically closed down PAYE schemes due to there being no activity, i.e. because the Revenue’s records indicate that PAYE has not been operated.

The letters are being generated following an automated review of HMRC’s records and this has the benefit of:

• Enabling HMRC to identify that no returns are due more quickly;
• Removing the obligation to make real time submissions and subsequent requests for both returns and payment; and
• Removing an unnecessary burden on employers and the additional cost to HMRC of maintaining and administrating unnecessary records on their systems.

HMRC will consider a PAYE scheme as inactive, and therefore not needed, if all of the following apply:

• An employer has made no PAYE returns in real time
• An employer has not made any payments to HMRC
• An employer hasn’t registered with HMRC that they pay their employees annually and pay HMRC annually
• An employer has not received an advance from HMRC
• No evidence exists that an employer has ever had any employees
• There is no evidence that an employer has paid any expenses or benefits

There are also two other conditions that are particular to the Construction Industry Scheme but which are not relevant to freelancers.

Once a scheme has been cancelled employers are unable to send HMRC any PAYE submissions. Any contractor that receives one of these letters and doesn’t think the scheme should have been cancelled should contact HMRC to ask for the scheme to be reopened.