HMRC have suggested a pragmatic solution for companies that only have an open PAYE scheme because they reimburse benefits covered by a dispensation and would otherwise be drawn into submitting a periodic online Employer Payment Summary (EPS) under RTI.
When a company has a live PAYE scheme it is required to report under RTI any payments of wages or salaries made to any employees, even if under the lower earnings limit (LEL) and that employee has not been issued with a coding notice. In addition, when applying online for a dispensation a live PAYE reference is required – see the online P11DX at: https://online.hmrc.gov.uk/shortforms/form/P11DX?dept-name=&sub-dept-name=&location=0&origin=http://www.hmrc.gov
However, as set out at in HMRC’s Compliance Operational Guidance at: www.hmrc.gov.uk/manuals/cogmanual/COG907080.htm, there is no requirement for a live PAYE scheme to be opened where a company is set up which will never pay earnings, and which, in advance of providing benefits or paying expenses, agrees a dispensation with HMRC. In such cases a request can be made for a ‘pseudo’ employer’s record to be set up in accordance with manual PAYE20070.
We understand from HMRC that where there is no intention to make wage or salary payments to employees or where all payments will be under the lower earnings limit and no employee has been issued with a coding notice then a ‘pseudo’ employer’s record can also be requested. This means that the employer or his agent can apply for an expenses dispensation using the PDF form P11DX at: www.hmrc.gov.uk/forms/p11dx.pdf and no reports are required under RTI unless an employee’s pay hits the NIC LEL threshold or a PAYE code is issued.
This pragmatic solution should help small companies that often have PAYE schemes purely to obtain the expenses dispensation.
We are in the process of trying to determine if and how an existing scheme can be converted into a pseudo scheme.