– what you cannot ignore
As an employer, you’ll have to pay Apprenticeship Levy each month from 6 April 2017 if you have an annual pay bill of more than £3 million or are connected to other companies or charities for which, in total, have an annual pay bill of more than £3 million.
As your payroll company we clearly have an obligation to calculate this tax each month and inform you of any additional amounts owing to HMRC. However, we can only assess your pay bill on a discrete basis (per PAYE scheme). We have no obvious way of ensuring that we are capturing the total pay bill of your group, associated companies and additional PAYE schemes. That obligation has to sit firmly with you.
How do I decide if I my company is connected to another company?
The basic rule for determining if two companies are ‘connected’ with each other is that they will be connected if one of them has control of the other or if both are under the control of the same person or persons. The term ‘control’ is given the same meaning as in sections 450 and 451 of the Corporation Tax Act 2010. This is where a person has or is entitled to acquire the greater part of the share capital or voting power in a company, or in the event of a distribution of the company’s income the greater part of the amount distributed, or in the event of distribution of assets the greater part of the company’s.
We would recommend that you confirm with your accountant or solicitor your position on groups and connected parties. Please note that this does not just apply to companies. An individual employer, LLPs and charities can all form these legal associations. Please do not ask us to make this assessment for you. We are not in a position, as your payroll company, to advice over this type of complex legislation.
Once you have clarified the position you must inform us. We need you to complete and return our Apprenticeship Levy questionnaire in order for us to be able to properly calculate this levy on your behalf.