Payroll

The purpose of this engagement letter is to set out the basis on which we are to assist you in: calculating deductions and making payments to your employees; filing the necessary reports with HM Revenue & Customs; paying the correct amount of pay as you earn (PAYE) tax and national insurance contributions (NIC) to HM Revenue & Customs, and; completing the year-end forms required by HM Revenue & Customs (HMRC) for any employees that have received benefits from you, so as to comply with tax legislation.

1 Your responsibilities

1.1 You agree to provide us with complete and accurate information regarding your employees and payments due to them including expenses payments not covered by the statutory exemption or paid under an approved method. You will provide us with this information before you first pay a new employee.

1.2 If you operate within the construction industry you agree to provide us with details of construction industry scheme (CIS) deductions suffered that you wish to offset against your PAYE payments to HM Revenue & Customs (company subcontractors only). This information must be received for each “tax month” (tax months run from the 6th of the calendar month to the 5th of the following calendar month) and by the 19th of the month in which the tax month ends. In addition, if you are a contractor within the construction industry, you agree to provide us with details of the CIS deductions you have withheld in each tax month, if you wish us to advise you of the total amount due to HM Revenue & Customs (CIS and PAYE taxes combined).

1.3 Our payroll team will provide you with specific details of the information we require and when we need to have this information from you. You agree to provide the information they request. You recognise that where information is not provided to us within the timeframe we outline, we are not responsible for any delays for payments or reports to employees or HM Revenue & Customs.

1.4 It is necessary for us to submit a Full Payment Submission (FPS) to HM Revenue & Customs on or before the time you make payments to your employees. We will also need to file Employer Payment Summary (EPS) reports where the amount of taxes you are paying to HM Revenue & Customs differs to the amounts shown on the FPS reports. If an error is made with regard to an earlier tax year, an Earlier Year Update (EYU) report may be required.

1.5 These reports will be based on the information that you provide us, as summarised in the information that we submit to you for each pay period (as outlined above). HM Revenue & Customs can impose penalties if reports are late or incorrect and so it is vital that you carefully review the information that we submit to you and let us have any amendments immediately, If we do not hear from you before a report submission date, we will take that as your approval of the report and make the online submission accordingly. You will remain legally responsible for the accuracy of the return.

1.6 If you require us to make an amendment to a submitted FPS or EPS or to submit an EYU, you will let us know as soon as possible and before the time of the next employee payment date.

1.7 You will be responsible for completing the checks on a new employee’s eligibility to live and work in the UK in accordance with the Government’s Code of Practice “Preventing Illegal Working,” and the Immigration, Asylum and Nationality Act 2006.

1.8 You will be responsible for ensuring your workers are paid at least the national minimum wage, monitoring the annual leave entitlement of your employees and dealing with all aspects, legal or otherwise, of being an employer.

1.9 You will be responsible for managing any childcare scheme for the benefit of your employees, but we can assist in computing exemption entitlements if required.

1.10 You will be responsible for ensuring that your employees are aware that the payroll function has been outsourced to a third party.

1.11 You will forward to us any communications received from HMRC, in sufficient time to enable us to deal with them as may be necessary within the requisite time limits. Although HMRC has the authority to communicate with us when form 64-8 has been signed and submitted, it is essential that you let us have copies of any correspondence received, because HMRC are not obliged to send us copies of communications issued to you and, in most cases, will not do so.

1.12 You agree to inform us when benefits in kind are provided to employees and to provide us with complete and accurate details of all benefits for the tax year (i.e. 6 April to 5 April) within 60 days of the end of the tax year. Where information is not provided within this timeframe we are not responsible for penalties charged by HMRC.

2 Our responsibilities

2.1 We will prepare your payroll for each payroll period to meet UK employment tax requirements. This will include the following:
– Calculating the PAYE tax deductions, including at the Scottish and Welsh from April 2019 rate of income tax, if applicable.
– Calculating the employees’ NIC deductions.
– Calculating the employer’s NIC liabilities.
– Calculating any statutory payments, including statutory sick and maternity pay.
– Calculating reclaims of statutory payments, for example maternity payments.
– Calculating other statutory and non-statutory deductions.
– Submitting information online to HMRC under Real Time Information (RTI) for PAYE.

2.2 For each payroll period we will send you the following documents in time for you to be able to make payment:
– A payroll summary report showing for each employee the gross pay, any additions, any deductions and the net pay.
– A payslip for each employee.
– A P45 for each leaver.
– A report showing your PAYE and NIC liability and the date it is due for payment.

2.3 For each payroll period we will also send you details of any other information that will be submitted online to HM Revenue & Customs on or before the time you make payments to your employees.

2.4 We will use the information described in paragraphs 2.1 and 2.2 above to make the necessary “Full Payment Submission” reports to HM Revenue & Customs. [Unless we hear from you in line with paragraph 1.2 above, we/We] will assume the information is approved by you and submit it accordingly.

2.5 We will prepare and submit monthly “Employer Payment Summary” reports to HM Revenue & Customs where needed. This will apply where the payment you are due to make to HM Revenue & Customs differs to the amounts shown on the Full Payment Submissions.

2.6 We will deduct the Employment Allowance from the payroll if you are eligible to claim this. Where you have more than one payroll in operation we will agree with you which payroll will be used to make the claim. You will be responsible for confirming eligibility to make the claim.

2.7 We will include in the payroll appropriate amounts in respect of any benefits in kind which you have agreed with HMRC will be taxed through the payroll.

2.8 We will deal with and, where necessary, process any adjustments to your payroll communicated to us by HM Revenue & Customs (this may be, for example, updated tax codes and identified National Insurance numbers). Please let us know if you require a copy of such correspondence.

2.9 We will make the necessary declarations and indications in your final payroll report for the tax year and will liaise with you where any of the information is unknown to us.

2.10 Following the end of the payroll year, we will send you a Form P60 for each applicable employee.

2.11 We will also provide such other payroll ad hoc and advisory services as may be agreed from time to time. This may include filing an “Earlier Year Update” as referred to in paragraph 1.4. These services may be the subject of a separate engagement letter. We will discuss and agree our fee for such work when it is commissioned by you.

2.12 Where specialist advice is required on occasions we may need to seek this from or refer you to appropriate specialists.

2.13 Since 17 July 2013 a General Anti-Abuse Rule has been in operation in the UK. This rule enables HMRC to further tackle abusive tax planning schemes. Due to the low probability of eventual success of such schemes and the high ethical standards of this firm, it is our policy not to advise on tax schemes that we consider to be artificial or aggressive in nature. Please let us know if you would like to discuss this matter further or if you feel that you are disadvantaged in any way by the firm’s policy on tax avoidance.

2.14 We will prepare forms P11D as may be required for each employee from the records, information and explanations that we are provided with. We will submit the P11Ds together with the P11D(b) form after these have been approved by you.

2.15 The approver of the return cannot delegate this legal responsibility to others. The approver agrees to check that the forms that we have prepared for you are correct and complete before approving them. You are no less responsible for errors in unapproved returns, submitted on the basis of the information provided to and processed by us, than if you had confirmed your approval of the returns.

2.16 We will send you the P11D information for you to forward on to your employees and directors by the statutory due date.

2.17 We will calculate and advise you of your Class 1A NIC liability in time for you to make payment to HMRC before the due date.

Engagement Letters