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Engagement Letters: Payroll Terms

Payroll: Your Responsibilities

(1) You agree to provide us with all information relating to your employees and their pay elements.

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.

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 and 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 and Customs (CIS and PAYE taxes combined).

(2) You agree to provide us with the requested payroll information within timelines which are set to ensure that your employees are paid on time.

You agree to provide the information they request. You recognise that where information is not provided to us within the time frame we outline, we are not responsible for any delays for payments or reports to employees or HM Revenue and Customs.

It is necessary for us to submit a Full Payment Submission (FPS) to HM Revenue and 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 and 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.

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 and 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.

(3) You will advise us of any amendments required to your payroll and provide us with copies of any correspondence received from HM Revenue and Customs.

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. If you receive any correspondence direct from HM Revenue and Customs, you will forward a copy to us within 72 hours.

(4) You are responsible for ensuring that your employees receive their end of year payroll information, P60s, by 31 May each year.

You are responsible for ensuring that your employees received their end of year P60s by 31 May each year. These will be supplied to you in good time by our payroll team.

(5) You are responsible for all other employer compliance.

You are responsible for all other employer compliance including but not limited to:

  • 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
(6) You will provide us with complete and accurate information relating to your employees.

You agree to provide us with complete and accurate information regarding your employees and pension contributions due from them. You will also provide us with details of your employer contributions. You will provide us with this information before you first pay a new employee. If an employee changes their status regarding auto-enrolment you will inform us immediately.

You will provide us with details of any changes in employee working so that we can determine whether the employment status has changed in relation to auto-enrolment.

You will inform us of all new staff; it will be your responsibility to provide them with the required auto-enrolment information.

(7) You will carry out your statutory responsibilities in relation to auto-enrolment.

You will register for auto enrolment with ‘the Pensions Regulator’ (tPR). You will identify and appoint an appropriate pension provider.

(8) You agree to provide us with complete and accurate details of all benefits and reimbursed expenses for the relevant tax year.

You agree to provide us with complete and accurate details of all benefits and reimbursed expenses for the tax year (i.e. 6 April to 5 April) within 28 days of the end of the tax year. Where information is not provided within this timeframe we are not responsible for penalties charged by HM Revenue and Customs.

(9) You will answer our full P11D Questionnaire within 7 days of being sent.

We will send you a P11D Questionnaire to cover most, if not all, of the areas relevant to your annual P11D Return. This should be completed accurately and returned to us within 7 days of being sent.

(10) You will be responsible for managing any childcare scheme.

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.

(11) You will be responsible for ensuring that your employees are aware that the payroll function has been outsourced.

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

Payroll: Our Responsibilities

(1) We will prepare your payroll for each payroll period.

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;
  • Calculating the employees’ NIC deductions;
  • Calculating the employer’s NIC liabilities;
  • Calculating any statutory payments, including statutory sick and maternity pay; and
  • Calculating other statutory and non-statutory deductions.

We will include in the payroll appropriate amounts in respect of any benefits in kind which you have agreed with HM Revenue and Customs will be taxed through the payroll and which you have advised us of.

(2) We will provide you with specific details of the information we require in order to process your payroll.

Our payroll team will provide you with specific details of the information we require and when we need to have this information from you.

(3) We will send you all relevant payroll documents for each payroll run in the required format.

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 (unless you tell us this is not required);
  • A P45 for each leaver;
  • A report showing your PAYE and NIC liability and the date it is due for payment.
(4) We will prepare and submit all electronic information required by HM Revenue and Customs under RTI.

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

We will use the information described above to make the necessary “Full Payment Submission” reports to HM Revenue and Customs. Unless we hear from you in accordance with this letter we will assume the information is approved by you and submit it accordingly.

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

(5) We will deduct the Employment Allowance from the payroll if you are eligible to claim this.

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.

(6) We will deal with HM Revenue and Customs correspondence in respect of your day to day payroll.

We will deal with and, where necessary, process any adjustments to your payroll communicated to us by HM Revenue and Customs (this may be, for example, updated tax codes and identified National Insurance numbers).

(7) We will complete your payroll year end.

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.

(8) We will provide you with the year end payroll information required for each employee.

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

(9) We will provide ad-hoc payroll services and advice as requested.

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

(10) We will not advise on aggressive tax schemes.

Since 17 July 2013 a General Anti-Abuse Rule has been in operation in the UK. This rule enables HM Revenue and Customs 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.

These ‘Engagement Letters: Payroll Terms’ were updated in October 2019.

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Encore Machinery Limited

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