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Thinking of Merging Your Business? HMRC has New Guidance

HMRC has recently updated some of its regulations when it comes to company mergers. So, if you’re contemplating partnering up with a new company and integrating your team, or simply transferring ownership, there are new rules that you need to apply.

The detail is in whether or not it’s a merger, or a succession.

What’s the difference? 

Apparently, it’s to do with ensuring new payroll records are correct, and how data is transferred over. So, your loyal employee with 10 years under their belt may show up to HMRC as a new employee, without any previous tax details, meaning they may be incorrectly taxed. 

The new update stipulates:

If HMRC provides the restructured business with a new employer reference or you are moving to a new payroll system, businesses must:

Send a leaver Full Payment Submission (FPS) with all details such as YTD pay, and tax details. You don’t need to provide a P45, but give HMRC the details up to the date of the change. Then send HMRC the new FPS with all the new details and employer reference. This must be done in the correct order, sending the old FPS before you send HMRC the new one.

Restart the employments for each employee and return YTD figures to zero.

Record the start date for the new payroll and indicate on the starter declaration, C for BR codes or codes starting with a D prefix and B for any other code.

If the employee has any company benefits, you must submit P11D and P11D(b) under your new employer reference, containing the information from both the old and new employer references. 

If your employee moved to a new payroll under the same employer reference, you must continue to operate PAYE and report information under the same employer reference. 

Confused? We are? That’s why we suggest doing the smart thing, and contacting either the HMRC employer helpline, or, better yet, you could contact one of our fabulous accountants and have them take the pain away and let them take care of it for you. 

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