Hi - An offshore company was paying employee (Director) under UK PAYE up to 2015 for project work overseas. Employee is a UK resident. The project stalled, and employee received no income for 8 years but continued to work for them. The company suspended PAYE and made no statutory payments as it had no funds. The project just sold and employee will receive a lump sum final payment of c. 65k. Company will close down immediately.
Q: Can employee minimize tax by having a portion allocated to a redundancy payment, if available?
Q: Can employee "allocate" the payment over any of the prior unpaid tax years
Q : Can employee encourage the company to make up the missing statutory payments, pension etc
Any other advice welcome.
A company had an offshore project and was paying UK based management employees under PAYE. The project faltered and the company agreed with the employees to accrue compensation due at that point (no further salaries were paid and PAYE was suspended, although it reported annually and P60s issued etc) until the project was sold some years later. The proceeds of the sale will be used to pay the partial o/s balances to the employees by negotiation. The company had no other activities in the interim or funding until the project was disposed of although management conducted a non paying caretaker role until the project was disposed of.
Query: Is it correct that the lump sum payment will then trigger the necessary company related employee taxes for the year in which it is to be paid (2023) and not for any of the prior years as no activity occurred. I would presume this also applies to the employee personal tax declarations to be made .