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You have to sign off your 2003/04 PAYE return (Form P35), by May 19. Now there's also something you need to do before April 19 to avoid the Taxman’s "interest'. What is it and how do you avoid interest charges?

Recap. The Form P35 is your annual statement, declaration and certificate. It includes a summary of your employees, including leavers, for the tax year: This list shows the tax and NI deducted from the pay of those employees together with employers' NI, tax credits and student loan deductions. The P35 together with the individual Pl4s and P38S (student declarations), have to be submitted to the taxman within 44 days of the end of the tax year, i.e. by May 19.

New look. The P35 for 2003/04 is now a four-page document. Page 1 sets out your obligations. Pages 2 and 3 require you to list details of the employees and to reconcile the total of your list to what you have actually paid over to the Taxman for the year. Page 4 contains several tick box questions about employees etc. that must be completed before you sign and date the declaration.

News. For the first time in a number of years the seven-day extension to the deadline of May 26, is not specifically stated on the Form P35. So it's best to assume this isn't available this year. Where these returns are not logged as received at your PAYE tax office by the statutory filing date, penalties are chargeable (£100 per month per group of 50 employees).

Lots of boxes. One part of the Form P35

compares the total of your payroll records with the total paid by you to the Collector of Taxes. There are some 32 boxes on the 2003/04 payment reconciliation; new boxes have been added to take account of Statutory Adoption and Paternity Pay and the associated NI compensation due under the small employers' relief scheme for statutory payments. Don't panic, the Employer Help Book El0(2004), Finishing the tax year up to April 5 2004, contains guidance on completing each of the boxes. Remember the object of all this is to highlight any unpaid PAYE and NI for 2003/04!

Trap 1. PAYE and NI due for 2003/04 should be paid by April 19, although the P35 does not have to be in until May 19. Any payment due to the Taxman on the Form P35 will attract interest if paid after April 19, 2004 (due date for month twelve of the PAYE year).

Trap 2. If the amount outstanding on the P35 is "excessive" and not paid by April 19 then brace yourself for a possible Inland Revenue audit. Unfortunately the Taxman does not tell us what percentage of the total PAYE and N1 bill he considers to be "excessive".

Tip 1. Prepare a payment reconciliation for 2003/04 before April 19. If someone else handles your end of year procedures, ask for the payment reconciliation to be done early. Use the payroll summary for 2003/04 if the P14s haven't been run off yet. If the reconciliation is only a few pence out, don't worry.

Tip 2. If more than a few pence are involved make any necessary payment before April 19 to avoid suffering the Taxman's "interest". You don't have to make a separate payment, just add an amount to your month twelve PAYE payment for 2003/04 which is due by April 19 anyway.

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This web-site was last updated on 29/07/2008

Specialist Dental Accountants for over 27 years.

Copyright © 2003-2008 Mac Kotecha & Company. All rights Reserved. The information on this site is for general guidance only. It is essential to take professional advice on specific issues about their impact on any individual or entity. No liability can be accepted for any errors or omission or for any person acting or refraining from acting on the information provided on this site.

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