Clearly the parent company firstly needs to set up its own PAYE scheme in order to ensure the current employees of the subsidiary are correctly paid under RTI when they legally become employees of the parent company.
The operation of PAYE and NIC are dealt with by separate Statutory Instruments but both achieve a similar outcome here.
The rules are covered by Regulation 102 to 104 of SI2003/2682 and HMRC has a useful summary at PAYE30045. There will be no need to issue forms P45. The subsidiary will be responsible for operating PAYE on payments to employees before the transfer but then will simply close their PAYE scheme down with the parent operating PAYE thereafter. Forms P11D will only be submitted by the parent company covering the entire tax year.
The Class 1 NIC rules follow the PAYE Regulations by virtue of Schedule 4 SI 2001/1004 and so the above PAYE rules equally apply to employer and employee Class 1 NIC. The Class 1A rules are covered by Regulation 72 of SI2001/1004 and mean that the parent company will be liable for Class 1A NIC (on relevant P11D benefits) for the entire tax year.
Your client must contact HMRC’s Employer Helpline so that they are aware of the succession and can adjust their records accordingly. See HMRC’s guidance on this, which includes guidance on the RTI procedures to be followed, at https://www.gov.uk/guidance/payroll-what-to-do-if-your-business-merges-or-changes-ownership
In addition, further HMRC guidance on the RTI procedures is at PAYE30009.
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