Time is ticking

The Chartered Institute of Taxation (CIOT) are advising employers to act quickly where they may have inadvertently fallen foul of the rules for connected companies and charities, by claiming multiple Employment Allowances against their national insurance contributions (NIC).

Most employers can reduce the NICs they pay by up to £2,000 per tax year, by claiming the Employment Allowance (EA).  However, where your company or charity is part of a group, only one company or charity in that group may claim the allowance.

The CIOT has stated that it understands there is a small window of opportunity for employers to correct their mistake through RTI without a penalty being charged:  HMRC can easily identify groups claiming more than one allowance and those failing to correct the error themselves stand to suffer stricter penalties.

HMRC is already investigating avoidance cases seeking to exploit the EA through contrived schemes, which is quite separate from the above errors which may simply be because the payroll operator has not been made aware of other group entities.

Further information on EA may be found here, together with more information on connected companies and charities.

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