Newsletter

HMRC CLAMPDOWN ON NANNIES TAX AVOIDANCE

The Government announced after the 2012 budget that they are going to provide more money for HMRC investigations targeted at households who employ a nanny as part of a crackdown on “evasion, avoidance and fraud”.  This follows evidence that many parents are not declaring some or all of their nanny’s salary.

 If an employer is caught evading PAYE for their nanny, they will be required to pay all the underdeclared tax and national insurance and will have to pay a 100% fine in addition to the current penalty regime for late payment and filing of returns.  Certain employers, who as professionals (solicitors, accountants etc) should be aware of these rules, could be prosecuted in addition to the above.

FASTER PAYMENT SERVICE

HMRC have announced that UK tax and NI payments can now be made via the Faster Payment Service so that electronic payments should clear HMRC’s account the same day.  Previously, payments made electronically did not clear for 3 working days giving rise to potential penalties and interest. 

Taxpayers are advised to contact their own bank or building society before making a payment to confirm that their own bank can process Faster Payments, whether there are any daily limits and the cut off time to make a payment to clear that day.   

It is also important to ensure that the correct bank account details and PAYE collection reference are used.  In most cases the bank account details will be Account 12001020, sort code 08-32-10.
 

PAYE PENALTIES

All forms P45 and P46 must be filed electronically with HMRC and should not under any circumstances be sent to the tax office.  Initially no penalties were issued, but warning letters are now being sent to employers who have not filed forms online.  Penalties range from £100 upwards where 2 or more paper forms have been filed.  We would therefore urge all employers to ensure that their nannies do not send the P46 when they are given it to sign but return it to Taxing Nannies for electronic submission. 

PAYE penalty warning notices are also now being issued where there is more than one late payment of PAYE.
 

REMOVAL OF SIMPLIFIED/DOMESTIC PAYE SCHEMES

In the past, employers registering for PAYE schemes themselves could often apply for a simplified PAYE scheme with the result that no penalties were payable for late submission of forms P35 and filing of P46s and P45s was not required.  However, from April 2012, new simplified schemes are no longer available. 

Existing domestic PAYE schemes will be closed from April 2013, at which point full online submission will be required.  This will not impact any of our clients as we already provide a full PAYE service regardless of whether the scheme is currently simplified.
 

TAX CODING NOTICES

Over the last few months we have received many notices of coding for nannies which we believe contain an adjustment for underpayment of tax with the result that they no longer have a full tax code.  The implication for employers who pay a net salary is that the liability will automatically fall on the employer unless they change their nanny’s salary to a gross salary.  

As payroll agents we are not entitled to receive a breakdown of a tax code amendment although this will be sent to the employee.  It is therefore essential that the nannies are advised to let us have any communication from HMRC regarding their tax code so we can confirm whether the adjustments are correct.