As an employer, you have a duty to collect PAYE from your employee’s salary payments and forward these to HMRC. Not doing this on time can result in penalties from HMRC and a complete failure to do so, could suggest deeper problems within the company. There are repayment options available to companies who are struggling, but if HMRC are just one of a number of creditors, you could look towards closing your company down.
What is PAYE?
Pay as you earn, is the income tax which is deducted from employees salary, before it’s paid. For those employed by limited companies, they should deduct it from your salary before your paid as it goes to HMRC.
Employers should be reporting PAYE information to HMRC in real time and it should be paid on the 22nd of the next tax month for those who pay monthly. Those paying quarterly should pay on the 22nd after the end of the quarter.
What happens if I don’t pay it or can’t?
It is down to the limited company to sort PAYE for their employees and pay it before an employee has received their salary. If you can’t pay the amount of PAYE due, HMRC will look to charge penalties for late payments, as well as interest and will look to escalate the costs the more times you have late payments. Ultimately, HMRC can look to wind up your company and force you into liquidation if your arrears get too problematic.
What if there are greater problems?
A failure to pay PAYE suggests that you could be having serious cash flow issues. Tax money should always be used for tax and not be put towards other parts of the company. Ignoring the problems won’t help at all and even if a failure to keep up to date with PAYE is a sign of greater issue, it’s vital to communicate with HMRC.
Cash flow issues such as not being able to pay tax, likely suggests that there are much larger problems and HMRC could just be one of many creditors.
Options available and how we can help
If you can’t pay your PAYE arrears and are worried about the potential consequences, it’s vital to act quickly and look for help. We provide, free confidential advice and can look at the problems you’re facing and any of the bigger issues your company could have.
Help continue to trade
- Time to pay arrangement with HMRC – HMRC will allow you to make outstanding PAYE payments through monthly instalments that last for 12 months.
- Company Voluntary Arrangement – A formal repayment plan, which pools together all of your creditors and allows you to repay them in monthly instalments.
Close your company down and walk away
If the troubles you’re having paying your PAYE bill are down to cash flow issues and you’re having bigger problems, it could be the moment to close your company down. It has to be done through the correct process of a creditors voluntary liquidation (CVL). This will see your company formally closed down, with the sale of all company assets used to pay any remaining creditors you owe.LSee more on Creditors Voluntary Liquidations
If you can’t keep up to date with your PAYE bill, it’s important to look at the reasons behind your company’s inability to pay your liability. Not being able to pay, can result in fines and penalties from HMRC increasing the problem. Repayment plans can help aid you if you’re simply having a troubling time, but bigger problems might suggest the company needs to be closed down.
Book a free telephone consultation with one of our initial advisers