HMRC drops PAYE record replacement instructions for voluntary arrangements

HMRC has withdrawn its instructions to close an existing employer record and create a replacement when an employer enters a voluntary arrangementGOV. The retained guidance says that, after approval, a debtor whose business continues to employ staff remains the employerGOV and must operate PAYE in the normal wayGOV, including where some employees are laid off.

The previous instructions specified that the old record should cease on the day before approval of the voluntary arrangementGOV and that a new record should be created in the employer’s name. They also prohibited including “Voluntary Arrangement” in the employer’s name or address details. Those directions have been removed from the voluntary-arrangement section of PAYE21130GOV.

The deletion also covers the internal notification and forms process. This described notifications from the Enforcement & Insolvency Service in Newcastle for bankruptcy, liquidation or receivership, and from the Voluntary Arrangement Service in Worthing using VAS8. The removed list identified INSOL219 as a request to create a post-insolvency employer record, INSOL238 as a request to cease one, VAS8 as advice to cease and replace a record, and VAS12 as notification of a rejected proposal requiring no record update.

A further deleted instruction required confirmation or a request from ICHU, VAS or IS before ceasing or creating records, or merging records for the same employer where any carried an insolvency indicatorGOV. The revised voluntary-arrangement section supplies no replacement record-handling procedureGOV. The remaining direction to operate PAYE normally should therefore be distinguished from the former administrative steps.

Separate guidance for a company continuing to trade in administration remains: the administrator or administrative receiver accounts for PAYE as the company’s agent, the company remains the employer, and HMRC allows its existing PAYE scheme to continue. Where the business ends, the guidance instead calls for the normal employee-leaving procedure, including P45s, and records cessation at the date of insolvency.

The relevant guidance is HMRC’s PAYE21130, whose separate earnings-timing discussion refers to section 18 of the Income Tax (Earnings and Pensions) Act 2003.