Pay-as-you-earn (PAYE) schemes that have been inactive for a minimum of 120 days will be automatically cancelled, according to HM Revenue and Customs (HMRC).
The tax authority has announced that an RTI206 letter will be issued to an employer whose scheme is due to be shutdown, following an automated review of Revenue records.
HMRC believes the new approach to shut down inactive schemes will allow officials to identify at a much earlier point that no returns are due – removing the obligation to make real-time submissions and subsequent tax returns and payments.
HMRC will consider a PAYE scheme as 'inactive', and therefore not needed, if all of the following apply:
You’ve made no PAYE returns in real time.
You haven’t made any payments to HMRC.
You haven’t registered with HMRC that you pay your employees annually and pay HMRC annually.
There’s no evidence that you want to claim Construction Industry Scheme (CIS) deductions suffered.
You haven’t received an advance from HMRC.
You haven’t had any periods of CIS liability.
There’s no evidence that you’ve had any employees.
There’s no evidence that you’ve paid any expenses or benefits.
It will not be possible to send PAYE submissions once a PAYE scheme has been cancelled. The RTI206 will include an explanation of how to reopen a scheme that was closed erroneously.
HMRC will be automatically closing inactive schemes that were opened on or after April 2013. The authority is also manually monitoring schemes, shutting down those it believes are inactive.
Registered annual schemes will be closed by neither the automatic or regular manual process.
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