You need to tell HM Revenue and Customs (HMRC) straight away if you stop employing people on a permanent basis. If it is for a temporary period however, you will need to continue to close your pay runs and if no employees are paid within a tax month an Employer Payment Summary (EPS) will need to be submitted for each pay tax month. (Additional information on the different types of RTI submissions and when they are due can be found here.)
Before you close the final pay period you need to ensure that all employees have a leave date showing on their record. This needs to be entered into all employee records and can be found by following the path below.
Employees --> Details --Leave Information.
The system will automatically default to not include the employee on their final pay run if the employee is due to receive a payment the toggle for 'Attached to Open Pay Run' should be switched from 'No' to 'Yes' (as shown on the example below:)
All employee payments should be entered as usual and once your preview reporting has been thoroughly checked the final pay run can be closed (Step by step guide to closing your Pay Run) . Once your final par run is closed Employees should be forwarded their P45, which can be printed off from the system.
To officially close your PAYE scheme with HMRC you will need to submit a 'Cease Trading Date' in an EPS , until you have done this you will be still be viewed as an employer and could be charged penalties for late submissions for all future pay runs until HMRC receive the EPS. You may also receive estimated PAYE Bills from HMRC. This can be located by following the path below.
Submissions --> EPS --> Edit ( Pencil Icon) --> Enter Cease Trading date and 'Save'. (Please Note: The cease trading date should not be earlier than any employees leave dates) - As with all RTI submissions please complete a test submission and then take the submission off test and resubmit ensuring that your final submission shows with a 'Successful' status.
Submitting electronically via an EPS demonstrates you have clearly followed instructions outlined by HMRC doing everything within your power to ensure your PAYE scheme is closed correctly. This should prevent any aforementioned charges from being applied. When you have submitted the EPS containing the cease trading date, you will need to clear any outstanding balances for tax and National Insurance to HMRC, within 17 days (or 14 if you’re paying by cheque)
If your circumstances change and you do decide to re-employ staff within the same or following tax year, your cease trading date can simply be reversed out reactivating your PAYE scheme by simply sending an FPS with your PAYE reference number stated.
If however your business merges/changes but does not cease to trade there are separate rulings, depending on the individual circumstances ,which you should take advice from HMRC directly to find out exactly you what to do with your payroll and PAYE reference numbers.