HMRC to close unused PAYE schemes

The HMRC has announced that employers with Pay As You Earn (PAYE) arrangements in place, which are currently not being used, are to have their schemes closed down.

A PAYE scheme is required by employers to report payroll information to HMRC in real time. You may see this referred to as Real Time Information (RTI).

All registered employers (or their accountant) have to send details to HMRC every time they pay an employee, at the time they pay them.  This is normally done through payroll software which sends information electronically to HMRC as part of their routine payroll process.

From the 28th October 2013, employers who have not used their schemes (i.e. have not made any submissions under RTI) will be receiving letters (an RTI206) from HMRC advising them their schemes will be shut down.  However, the letter will include an explanation of how to have a scheme reopened if it is closed in error.

For PAYE schemes that have been opened after 5th April this year and where the employer has not sent any PAYE returns or paid HMRC within four months of the scheme being set up, HMRC will be shutting these down automatically.

However, any scheme that has registered for annual reporting will not be closed by the process.

HMRC’s Director General for Personal Tax, Ruth Owen, praised this course of action:

“Closing schemes that are no longer needed is really important for businesses and for HMRC as it means that HMRC won’t waste employers’ or taxpayers’ time and money by needlessly pursuing returns or debts when in fact none are due.

Since April, employers or agents (acting on behalf of their clients) who have set up PAYE schemes that are no longer needed can easily close the scheme by reporting this on their final submission. This new process helps further as it means we can identify and remove unnecessary schemes early.”

If you have any questions on this matter or have a PAYE scheme which is currently unused then please get in touch with our Payroll team on 0161 249 5040