Useful tax deadline dates to be aware of for July 2013

July 2013

5th – Last date for agreeing PAYE Settlement Agreements
for 2012-13 (if any).

6th –  Deadline for submitting form 42 or other relevant forms to report share-related benefits provided to employees.

6th –  Deadline for filing forms P9D, P11D, P11D(b), or substitutes for the tax year ending 5 April 2013.

6th – Last date to give forms P9D and P11D to relevant employees.

19th –  Deadline for postal payments to reach HMRC Accounts Office for any outstanding Class 1A NICs for the tax year ending 5 April 2013.

22nd –  Final date for electronic payments to be cleared in HMRC’s bank account for any outstanding Class 1A NICs for the tax year ending 5 April 2013.

31st –  Deadline for second Self Assessment payment on account for tax year ended 5th April 2013.

Windows 8 & Windows Server 2012 Update

We recently had confirmation from Pegasus that they are continuing to make good progress with the testing of Microsoft Windows 8 (Enterprise edition) with Opera 3.

They are hoping to have the testing completed in the next couple of weeks which will be followed by a formal support statement.

They will then turn to testing Microsoft Windows Server 2012 with Opera 3. More information will follow late July.

Pegasus XRL, Pegasus CIS, Operations II and Opera II will also undergo rigorous testing on the above Microsoft platforms.

Managing “Leavers with no pay” under RTI

Here’s another new submission you now need to make under HMRC RTI for those who “leave without pay”.

If you have a type D leaver (left with no pay), then you must Submit a “specific employees FPS” for these leavers in addition to the regular fps. These employees are listed on the calculation report.

As standard, the FPS only contains employees that have been paid, so HMRC are not informed that they have left if there is no pay.

HMRC will assume they have left if the employee does not appear on a FPS for 3 months but, if the employee has been marked as having an Irregular Payment Pattern, it could be even longer before HMRC assume they have left.

This could result in them being issued a “BR” or “0” code and paying additional tax.

Has your company received a “Notice of Underpayment of Tax”?

If your company has received a Notice of Underpayment of Tax since the introduction of RTI, here’s what you now need to do……..

You must submit an Employer Payment Submission (EPS) before 19th of each month if you have made a deduction from the PAYE payment due to reclaiming a statutory payment such as SMP/SSP/SPP. So, for example, for May payroll you need to make the submission before the 19th June

The failure to submit the EPS has resulted in several employers getting Notices of Underpayment of Tax and NI from HMRC.

If you have multiple companies under the same tax reference you must consolidate the p32 before creating the EPS as it uses the p32 figures. Please note the EPS is YTD figures whereas the FPS is current period only.

RTI tax code problems – Incorrect PAYE codes you should ignore

As a result of the introduction of the RTI reporting system for PAYE, and some false assumptions made by HMRC in that system, many thousands of employees have been issued with incorrect PAYE codes. HMRC has advised affected employers to disregard them.

So what is the problem, and how do you know when to ignore a coding notice?

The problem(s)

Many employees who normally have their tax code restricted for benefits in kind have been given full allowances, while others have been issued with a code BR (ie, a flat basic rate, with no allowances) or code D0 (a flat 40% rate, with no allowances). Both will result in incorrect tax deductions.

The cause(s)

Both issues have been caused by the starter and leaver processes.

Missing benefits in kind restriction

All employers had to go through a process of aligning their employee records with HMRC’s system at the very start of their operation of RTI reporting. Large employers did this by making an Employer Alignment Submission (EAS) before they submitted their first Full Payment Submission (FPS). Smaller employers simply submitted their first FPS, which HMRC checked against its existing records of employees on that employer’s payroll.

HMRC expected all employers to include all their employees on either an EAS or the first FPS, but some employers did not do so. Where the EAS was submitted in parts, without being flagged as a series of part-submissions, or where the first FPS included only those employees who were paid on that date, rather than all employees, any employee records that were not on the first EAS or first FPS were treated by HMRC as having ceased employment at 5 April. This deleted the record of the benefits restriction to their tax code.

When these employees were subsequently paid for the first time under RTI, and appeared on a later FPS, they were incorrectly treated by HMRC as new starters, with no history, so a new code was issued automatically, with no restrictions.

Missing allowances

Some employees leave their job without the employer knowing – e.g. a casual worker who is paid at the end of a shift will often be paid in cash at that point, without committing to come back for another shift later. The employer expects him or her back, so the last payment is not flagged in the

RTI report as a final payment to a leaver. When the employer finds out that the worker has in fact left and will not be paid again, there is no RTI mechanism for flagging that worker as a leaver without making a new payment, which is unlikely to happen. Under the old regime, employers could submit a late P45, but that does not exist under RTI.

So, as far as HMRC knows, the employee is still on the ‘old’ payroll with a personal allowance, but he or she can’t be ‘ceased’ by the employer without making a new payment. When the HMRC computer finds the employee appearing on an FPS from a ‘new’ payroll on a different PAYE reference, while still listed under the old reference, it assumes the worker has two jobs and issues a BR or D0 code for the new job, rather than transferring the old code.

Something has also gone seriously wrong with HMRC’s base data file. Some employers are reporting a large part of their workforce receiving BR or D0 codes, which is clearly not a result of unrecognised leavers. Employees are reporting receiving new tax codes for jobs they left years ago, before RTI was even a gleam in HMRC’s eye, while in the same mail delivery they receive another code – BR or D0 – for their current and only job. Tax is being overpaid by a lot of people as a result.

Employer actions

Employers and payroll bureaux are not sent details of how codes are calculated, so the response to a new coding notice may not be as simple as disregarding it.

Where the tax code is obviously wrong, and an employer or employee spots the problem, the employee will have to contact HMRC. HMRC will only speak to an employer to confirm whether a code has been issued and whether it can be ignored, but the employee’s personal details and the individual numbers underlying the code are confidential.

Of course, it may not be obvious that a code is wrong, and a busy payroll team may just process code changes as they are notified, and a payroll bureau has no authority to disregard a code issued by HMRC.

Employees who normally receive P11Ds showing benefits should be warned to check carefully any new PAYE code issued. Any new BR or D0 codes should be queried by the employee unless they are expected.

For further information

There is guidance on tax codes on HMRC’s website at: http://www.hmrc.gov.uk/incometax/tax-codes.htm

HMRC’s employee helpline number is 0845 300 0627. The caller will need his or her NI number.

HMRC’s employer helpline number is 0300 200 3200. The caller will need the business’s employer PAYE reference number.

RTI News – PAYE for employers: National Insurance Numbers without suffixes

Recent HMRC guidance states:

‘In response to some National Insurance Number Verification Requests (NVRs) and Full Payment Submissions (FPS) with missing or incorrect National Insurance numbers, HMRC issued some National Insurance numbers without the final letter (A, B, C or D) of the number.’
The issue of National Insurance numbers is currently on hold whilst HMRC investigate.

It is important to note:
You should use the National Insurance number supplied by HMRC. If the suffix has been omitted this should be left as a blank. Opera 3/Opera II does not require the space bar to be used in place of the suffix as the system will automatically ‘complete’ the field to the required length.

Please do not guess which letter (A, B, C or D) should be used. If you do not know the suffix this should be left as a blank.

Please refer to http://www.hmrc.gov.uk/news/paye-nino-without-suffixes.htm for further details.

Payroll News Update

Irregular Employment Payment Pattern

This option should be ticked if payments are paid on an irregular basis, for example:

  • Seasonal workers
  • An employee on extended unpaid maternity leave
  • An employee on long term unpaid absence for three or more months

HMRC may remove an employee from their databases and treat the employee as a leaver after submissions have been analysed and a specific amount of time has passed (usually 3 months+). This is regardless of whether the employee was included in the original EAS. There may also be occasions where employees have been included in the FPS submissions and, subsequently have the irregular payment flag ticked, that HMRC will regard such employees as leavers and remove their records from their database. For example: The employee was submitted in the last FPS but they are now on long term leave of unpaid absence. The Irregular Payment Pattern indicator is switched on, however, as the employee will not be paid in the near future, they will not be default be included in future FPS files.

Remember, only employees who are ‘paid’ will be included by default in an FPS. You have the option to manually select any employee to be included within the FPS if required. HMRC will check if employees have not been paid for a specific period of time and treat them as having left that employment. To avoid this scenario for for employees who do not get paid regularly or will be going on long term unpaid absence (3 months or more), we suggest setting the Irregular Payment pattern indicator.

To avoid this scenario for employees who do not get paid regularly, we suggest using the irregular payment pattern indicator on every FPS submitted for that employee.

Unpaid Absence Indicator

Current guidance from HMRC is that employers are not required to complete the Unpaid Absence indicator on the FPS. Employers therefore should not select the associated option in Details and Bank – Additional Information – Unpaid Absence. As Universal Credit is progressively rolled out nationally, HMRC will issue further guidance on when employers should complete the indicator.