As a small business you are required by law to submit returns to the HMRC at the end of each tax year.

These returns are needed to allow the Inland Revenue to monitor the PAYE and National Insurance deducted from your employees' wages and to ensure that any calculations have been made according to Government Legislation for the current tax year.

The payroll year runs from 6th April through to 5th April the following year and this applies to all companies.

The period around Payroll Year End (PYE) can be a very busy time and quite daunting for a new business. Dave Turnbull, PYE expert for Sage, suggests that firms should start planning ahead now.

To help the Payroll Year End process run smoothly, here is a step-by-step guide for small businesses to follow:

Have you set enough time aside to complete your year end?

The amount of time it takes to run your year end depends on the number of employees you need to produce P14/60s for.

Are you aware of submission deadlines and fines for late or incorrect submissions?

  • HMRC impose strict submission deadlines and fines may be incurred for late or incorrect submissions. So be prepared and ensure you have everything in this list under control.

Do you have your Tax/District Reference and contact details for your HMRC office?

You must ensure all submissions contain the correct PAYE information. During this busy time of year, it is vital that you know who to contact should you have a problem. A visit to the Inland Revenue website should provide you with the right contact details - www.hmrc.gov.uk

Have you processed your final payroll for the tax year and checked your P11s to ensure your figures are correct?

  • Incorrect information on your P11s will result in incorrect Year End returns. If you have processed your payroll using accredited payroll software and have not made any processing errors, you can be sure that your payroll has been correctly calculated.

Are you adequately prepared for the obligations imposed by legislation changes?

There were many changes to legislation for the tax year 2003/2004 including the introduction of Statutory Paternity Pay and Adoption Pay, as well as changes to National Insurance legislation.

If you are using payroll software to calculate your returns, check with your supplier that you have the latest version of the software or if you need to upgrade. If you aren't using software, check the Inland Revenue website or contact your local tax office to obtain an Employers Pack.

It is vital that your returns are accurate otherwise you could have a fine imposed by HMRC.

Would your company benefit from making submissions via the internet?

  • Submitting your Year End returns via the internet can save you time and money. You need to register with the HMRC if you wish to file online and also ensure that your payroll software has been accredited by the Inland Revenue for internet submission.