Since October this year, HM Revenue & Customs (HMRC) have been issuing letters (RTI206) to employers to advise that because their records indicate that employers have not operated PAYE or paid any subcontractors, they have automatically closed the PAYE scheme due to inactivity.
The letters are generated following an automated review of HMRC records. The benefit of this approach is that HMRC identify that no returns are due at a much earlier point. It also removes the obligation to make real time submissions and subsequent requests for both returns and payment and it removes an unnecessary burden on employers and the additional cost to HMRC of maintaining and administrating their record on our systems.
When an employer is registered a new PAYE scheme is set up. If there has been no activity on the scheme after 120 days HMRC will automatically review it to see if it’s still needed.
HMRC will consider a PAYE scheme as not active, and therefore not needed, if all of the following apply: there have been no PAYE returns in real time; there haven’t been any payments made to HMRC; there has been no registration with HMRC that employees are paid annually and pay HMRC annually; there’s no evidence of wanting to claim Construction Industry Scheme (CIS) deductions suffered; no advance from HMRC has been received; there have been no periods of CIS liability; there’s no evidence of any employees; there’s no evidence that any expenses or benefits have been paid.
If these do all apply, the PAYE scheme will be cancelled and a letter will be sent explaining what’s happened. Once the scheme has been cancelled it won’t be possible to send HMRC any PAYE submissions – so if scheme shouldn’t have been cancelled, this letter explains how to contact HMRC to ask for the scheme to be reopened.
For more information on the criteria HMRC apply for closing a scheme, please see guidance on “Automatic cancellation of a PAYE Scheme” at www.hmrc.gov.uk/payerti/getting-started/new-employer.htm
