industry monitor update
Changes ahead A
t the time of putting this article together HM Revenue & Customs
(HMRC) has just published the February 2014 edition of Employer Bulletin. This 40-page document has served as a timely reminder of just how much is happening in the world of payroll at the moment. If you have not yet found time to read this then you really must – especially considering that the April edition will soon be published!
Some of the real time information
issues (RTI) we highlighted in recent articles are starting to be addressed and we provide an update on these below. Any feelings of guilt we have about continually commenting on RTI are quickly assuaged by the thought that it is still early days and much remains to be fully ironed out. Last month we referred to the penalty
regime that applied from 2014/15, but the February edition of Employer Bulletin confirmed a ‘staggered start’ to the introduction of new in-year late payment and late filing penalties. As we had severe misgivings about the introduction of late- filing penalties when RTI was still in its infancy, this delay is welcomed. We also explained the RTI year-end process as we saw it and this, too, is covered by HMRC in the Employer Bulletin as part of their communication strategy for employers. We still reckon many payroll people will feel something is missing this year by not having any big annual reconciliation exercise to do and we have published guidance for employers using our software to help offer some reassurance. In our February 2014 article, ‘System
design’, we highlighted what we considered unreasonable HMRC guidance in the area of notifying leavers, in particular the need to complete an earlier year update to notify the leaving date in March that is not advised to payroll until April. We asked, “How many employers will actually do
John Black and Neil Tonks of MidlandHR’s legislation team provide a legislation update, focussing on RTI developments
this?” To be fair to HMRC they are working with representative groups to review their guidance on leavers, including payments after leaving, and we understand this specific requirement will not be applied after all. For example, a leaving date of 31 March can be reported on the April full payment submission (FPS) showing the payment date as 30 April (i.e. the same payment date as the current employees being paid). Another recent revision to the guidance relates to redundancy payments where the previous version led to considerable confusion.
One aspect of leaver processing we covered in February, on which HMRC is unable to make short-term concessions, is the reporting of a changed leaving date.
...WILL LEAD TO THE CREATION OF A DUPLICATE EMPLOYMENT RECORD
For example, suppose you report a leaving date of 28 June in June’s FPS and then make a payment after leaving in August. In the meantime you have corrected the leaving date in your software to show 29 June. Reporting the revised leaving date on the August FPS will lead to the creation of a duplicate employment record. Instead, HMRC require you to continue to report the original leaving date of 28 June (even though this is incorrect). Much payroll software will not do this at the start of 2014/15. Discussions with HMRC about leaver processing and FPS reporting are continuing and might take some time to conclude, but we hope for more quick wins along the way. Moving away from RTI, the February Employer Bulletin covers two changes
announced in the 2013 Autumn Statement that take effect in 2015/16: l recognition of marriage through the tax system l abolishing employer national insurance contributions for employees under 21. Although the former will be handled through tax codes and does not involve software changes, the latter certainly will require software to be updated and we await HMRC’s technical specification. This will then be added to our list of enhancements to be undertaken for the start of 2015/16. The list already includes shared parental leave, and we understand that RTI changes for 2015/16 will be published in June. The annual cycle of legislative software developments is constantly with us! The February Employer Bulletin also advises that “in line with HMRC digital strategy and following a period of customer consultation” HMRC will no longer produce some of the employer helpbooks for April 2014. In particular, these statutory payment products – E14, E15, E16 and E19 – will be withdrawn from April 2014 and the appropriate information will be incorporated into online guidance. It is hard to argue that online guidance is not the way forward. However, our view is that current HMRC online guidance, especially that relating to RTI, has been less than satisfactory to date. It is fragmented, difficult to follow and subject to constant change with those changes not subject to version control so you never know whether the guidance you are reading today is the same as that which you read yesterday. In any case, we quite liked E14 etc! [Editor: see ‘Online guidance’ on page 7 for further information.]
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