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Jan Oliver

How to inform HMRC of leaver at end of tax year who was originally on hold

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I have a client who is a director of a company and was being paid wages up to 30th September 2015 when he reached retirement age. He requested that his wages be put on hold until further notice so I have been submitting a monthly EPS to HMRC to advise them that no PAYE was due. However, the client has now advised us that he wants to close the PAYE scheme at the end of the 2015/16 tax year so I need to enter him as a leaver and notify HMRC of this before I run the payroll year end, confirming the cessation date of the scheme as 5th April 2016. As I have already submitted the EPS for Month 12 and the last FPS was submitted in October 2015 to advise HMRC that his record was on hold, I am unsure how to progress. Any help would be greatly appreciated.

  • Hi Jan,

    In order to notify HMRC that the employee is a leaver, you should enter the leaver details into the Employee Record. For full details on processing an employee as a leaver, click here .

    You can then submit the FPS adjustment dated on the employee’s Last FPS Date. For full details on submitting the FPS adjustment, click here .

    When processing the year end, you should enter the Cessation Date  into the Choose Payroll Year End screen. You can then proceed with year-end as normal.

    For details on running year end, check the PYE section of our website:

    https://my.sage.co.uk/public/help/payroll/pye.aspx

    Thanks,

    Brian

  • Hi Brian

    Many thanks for your reply, however, I am still having an issue with submitting an FPS adjustment for this employee.

    I changed his record from on hold to normal then entered him as a leaver and printed the P45. Then I tried changing the payroll run date to the last date I submitted an FPS for him (31.10.15 when we notified HMRC that his wages were on hold) and tried to submit an FPS adjustment but the system states that I am unable to include this employee in the submission. Any ideas why?

    Thanks

    Jan
  • Hi Jan,

    As quite a few months have passed, there may have been updates that will prevent the FPS adjustment picking up this employee.

    In this case, you should:

    1. Remove the leave date and note the current tax code in Employee Record > Employment.
    2. Change the tax code to 0T (Zero T) on a Week 1 / Month 1 basis
    3. Set the Process Date to 05/04/2016
    4. Process Month 12 with £0.00 Gross (as the tax code is 0T W1/M1, the Net Pay will also be £0.00).
    5. Update Records for Month 12
    6. Re-enter leave date and the tax code noted in Step 1 in Employee Record > Employment
    7. Submit FPS for month 12. This will include the employee's leave date.

    You can then proceed to the year end, entering the cessation date into the Choose Payroll Year ENd screen.

    Thanks,
    Brian
  • Hello again!

    I will go through the procedure you mention above to rectify this problem. However, which reason should I enter for the late submission of the FPS dated 05/04/2016? I don't want the client to receive a penalty for this.

    Thanks,

    Jan
  • Hi Jan,

    Unfortunately we can't tell you what reason to select on the Late Submission window.

    These reasons are in the software at HMRC's request. The question from HMRC and the answer you provide is a conversation between yourself and HMRC.

    There is an option for 'Reasonable excuse'. If you select this, HMRC may contact you to find out what the reasonable excuse is.

    Thanks,

    Brian
  • Thanks Brian. I will select the most appropriate reason and will deal with any contact from HMRC if and when this happens.

    Jan

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