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RTI for 1 man Ltd Cos

What are the implications of RTI for v small 1 man Ltd Cos who pay below tax and NI payment thresholds and complete P35s but don't operate payroll as such?

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06th Jul 2012 08:19

Confused

How can they not operate payroll but complete P35?

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06th Jul 2012 10:10

Simples

We have lots of one man companies who take a standard £620 or £624 a month.  No PAYE deductions, so no monthly payslips or PAYE remittances required.  At the end of the year, we enter £7,440 or £7,488 into our payroll system, produce a P60 and file the P35 & P14.

I doubt RTI will force such companies into running monthly payrolls.  We will just make one RTI submission for Month 12, but I am not sure if we will have to continue to file nil PAYE payslips each quarter.

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06th Jul 2012 11:30

RTI for 1 man Ltd Cos

As a payroll bureau we do loads of these annualised payrolls and I initially assumed that the approach you outlined would work - one submission as an annual payment in month 12. Having read up however, it appears that this would not be strictly correct. RTI dictates that payroll information must be submitted every time an employee is paid and as such, unless the director only takes the tax free amount annually (most of ours take it each month)  a submission would be required each time they were paid...yuck!

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06th Jul 2012 11:48

OK, then

The director is not taking salary, but repaying his DLA, for 11 months of the year, which does not have to be reported under RTI, and the annual salary goes through in Month 12 to restore his DLA.  This would work provided he starts the year with a DLA in credit by at least £2,000, so even if he goes overdrawn by up to £5,000, it is repaid within the year, so no s.455 tax or BIK arises.

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06th Jul 2012 14:07

My understanding

If an employer is operating PAYE then using RTI they will have to tell us about payments of earnings to all employees, even where an employee earns less than the LEL 

So you may have to do FPS for each payment (on or before payment made) and EPS returns

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06th Jul 2012 16:01

RTI for one man Ltd Cos

Thanks for all the comments. All very useful.

The actual implementation is far off at present, but .........

just in case we all have to do monthly payrolls, does anyone know of a payroll package where you can set up all twelve same "payments" at the beginning of the year and then go away and forget about it!!

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11th Jul 2012 11:14

Monthly payroll

TasPay is brilliant when it comes to this. The autoprocess option means you can whizz through the payroll if the pay does not fluctuate.

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06th Jul 2012 16:52

Yes

Moneysoft's sometimes criticised interface allows you to do just that even more simply than copying an entry in a spreadsheet into the next 11 rows.

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11th Jul 2012 11:15

RTI for small companies

 

I run quarterly payrolls for small companies to keep their costs down so asked this very question of Maggie Anderson, HMRC RTI when she spoke at the CIOT residential conference.

Payroll runs will have to be run monthly or weekly.  As the information we send with each payroll run will be used for the processing of Universal Credits everyone has to be on the payroll run.

I am not sure if everyone appreciates the impact of RTI; in particular very small businesses which do not have a PAYE scheme at present.

The Mid Anglia CIOT/ATT branch is holding an event on CIS and RTI in November.

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11th Jul 2012 11:40

A couple of potential issues for annual pay

1) At the moment, HMRC say that if you don't send an RTI record for someone for 13 weeks, they'll assume they have left and they will automatically terminate their employment record.  To prevent this, you'll need to indicate that the employee/director is irregularly paid, which should just be a flag within your software.

2) When an employer first converts to RTI, they need to go through an alignment process.  In most cases this isn't very difficult, but you might find you have to send an extra return in April 2013 for each annual, one-man company.  You might be able to avoid this requirement (if you are brave) by enrolling in the pilot in March and doing one RTI return instead of a P14&P35 followed by an alignment RTI.

I'm hoping HMRC will produce some clear guidance covering these points, in time for April 2013.

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11th Jul 2012 11:53

Annual pay

 

Maggie Anderson advised us that the pay periods would have to be monthly or weekly.  There is no option to run the payroll quarterly so I doubt very much that an annual run will be possible.

Remember that you are going to have to report the number of hours worked in each period as this will be crucial to Universal Credits (as indeed it is with Working Tax Credits).  Universal Credits will be paid through the payroll.

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11th Jul 2012 13:17

The devil is in the detail...

...as any accountant knows.

And also as any IT expert worth their salt knows. It was nevertheless obvious from the very beginnng that RTI is going to be yet another opportunity for the Revenue to cock up big-style on a computer project.

patricia caputo wrote:
Maggie Anderson advised us that the pay periods would have to be monthly or weekly.  There is no option to run the payroll quarterly so I doubt very much that an annual run will be possible.

Patricia, what did you sense from this Revenue official when she addressed your conference? Are they listening to real world issues or have they already closed their minds to anything they don't want to hear? Why, for instance, should it not be possible for one man payrolls where tax credits are unlikely to be in point to opt out of the regular reporting requirement? Can the Revenue not see that they are imposing a new and mostly un-necessary requirement? Have they performed their VFM exercise and justified why it is OK to impose increased processing costs on the smallest payrolls when that additional info they will be receiving every week / month will just sit there unused because the employees in question don't by and large receive tax credits?

 

patricia caputo wrote:
Remember that you are going to have to report the number of hours worked in each period as this will be crucial to Universal Credits (as indeed it is with Working Tax Credits).  Universal Credits will be paid through the payroll.

Really? That bit had passed me by completely. That will be a cash flow nightmare if true. Is HMRC going to fund employers with low PAYE costs? Is that going to be as difficult to receive as SMP funding?

 

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11th Jul 2012 12:22

How literally do they mean

"monthly or weekly" I wonder?

 

We've got a couple of four weekly payrolls. One job that we took over ran payrolls 4-4-5 weeks.  Can't see HMRC coping with that - or even thinking about it.

Looks like yet another case of HMRC dictating that people must do things their way.

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11th Jul 2012 13:45

Hours worked

HMRC originally asked for the number of hours worked in each period, but they relaxed the requirement.

You will have to report the normal working hours, in bands.

On a related subject, they have recently added some extra RTI fields indicating whether the employee was on strike or taking unpaid leave.  I haven't had time to go through the new specification in detail and work out whether they can be omitted, but all this should become clearer in time.

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11th Jul 2012 14:07

Maybe someone should introduce HMRC to reality

According to the latest Federation of Small Business (FSB) statistics (Nov 2011):

There are 4.5 million small businesses in the UKSMEs account for 99 per cent of of all enterprise in the UK, 58.8 per cent of private sector employment and 48.8 per cent of private sector turnoverSMEs employed an estimated 13.8 million people and had an estimated combined annual turnover of £1,500 billion45.3 per cent of businesses are registered for VAT and/or PAYEThe number of sole proprietorships increased by 87,000 in 2010 and the number of companies, 6,000

http://www.fsb.org.uk/stats

The fact that HMRC is only dealing with the largest businesses in it's RTI trial tells me that it is effectively ignoring the actual needs of > 90% of businesses.

If you wanted a recipe for disaster, you've just described it.

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11th Jul 2012 14:09

RTI-small co

1) It appears that RTI is a one size fits all concept. On reading the blurb It makes no concession at all to the micro-companies or the typical very small company. Remembering that 85% at least of Uk businesses are less than 50 staff, never mind the one or two person concern. It is an intrusive system devised for reasons not properly explained by HMRC, except to pass work from HMRC to businesses and give us a bad name for having to charge fees for work not previously required..

That aside, many of you seem to forget that a director even of a one-man Ltd is still an employee and fully subject to wages legislation with employment law. Including contracts of employment and minimum pay regulations.

If your client does not comply with that legislation you leave yourself at a disadvantage in the salary v dividend argument. You should therefore always advise a contract of employment, and pay the directors the minimum hourly rate for a reasonable  number of hours. For a director the contract may be an annual sum for an annual number of hours, payable by agreed instalments, but PAYE and NI is payable on each instalment, subject to director's averaging rules.

If the work is seasonal or part-time the contract should say so, and by-the-by deal with use of any company car or van- most important.

Also, not least, your penalised client may have a PI claim against you, if he or she can show that you did not properly advise  regarding the above matter.

 

 

 

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11th Jul 2012 14:23

Not true

"That aside, many of you seem to forget that a director even of a one-man Ltd is still an employee and fully subject to wages legislation with employment law. Including contracts of employment and minimum pay regulations."

Not true - see http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175114

"If you are a company director you are an ‘office holder’ in law. You are not entitled to receive the National Minimum Wage for the work you do as an office holder. If you also have an employment contract or worker’s contract you will be entitled to the National Minimum Wage for the work you do under that contract."

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11th Jul 2012 14:28

Not quite correct

David Gordon FCCA wrote:
That aside, many of you seem to forget that a director even of a one-man Ltd is still an employee and fully subject to wages legislation with employment law. Including contracts of employment and minimum pay regulations.

A director is an office holder and his emoluments are subject to PAYE, however that does not make him an employee.

A director can quite happily and legally conduct all of the requirements of his office without becoming an employee and thereby being subject to all the trappings of a contract of service and National Minimum Wage regulations.

The fact that most employees do sign a contract of service and therefore by their own hands make themselves employees does not change this fact.

 

EDIT - Well done Peter, you got in there before me.

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By taxinfo
11th Jul 2012 16:37

Tas payroll not operating RTI

@ubergeek - TAS Payroll won't run from next tax year. They have decided not to be involved with RTI but rather hand over their payrolls to their beloved (or infamous) SAGE owners. They plan on migrating TAS Payrolls over to Sageline 50 Professional, I believe.

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11th Jul 2012 16:44

Why?

Why include it in an accounts package when they have their own payroll package already?

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11th Jul 2012 16:47

Don't forget the Universal Credit position

All this talk of running payrolls, weekly, monthly or annually is all very well, but what will need to be considered is whether the individual is entitled to make a claim for Universal Credits.  Universal Credit is the successor to Tax Credits amongst other things and we will start to see claims for Universal Credit from October 2013 with existing tax credit claimants being transferred into the new system between 2014 and 2017.  The current proposal is that HMRC once in receipt of someone's pay details will then forward it to the DWP who will calculate on a monthly basis an individuals entitlement to Universal Credit.  With this in mind if you are running payrolls for clients at either regular or irregular intervals, you will need to find out if Universal Credit is being claimed by them as the timing of those payments and the amount will have an effect on someone's entitlement.

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11th Jul 2012 17:04

Small businesses, the pilot and universal credits

Small businesses are included in the pilot.  HMRC are trying to get a cross-section of employers by size and industry.

Although Universal Credit is the key reason why RTI is being introduced, nowhere in the legislation does it say you don't need to bother filing if Universal Credits are not being claimed.  All employers must file RTI returns.

Once HMRC have all this data, there are lots of other uses they can put it to.  For example:

- to check whether employers are making the correct monthly payments to HMRC (and issue penalties if they are not)

- employment trends can be analysed by the Office of National Statistics

 

There is a trial of the Universal Credits system in the Greater Manchester area, starting in April.  At that point, not all employers will be filing RTI, so it is unclear how they'll have the data they need to pay the claimants - that's one for DWP to figure out, I guess.

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11th Jul 2012 17:32

Are you sure?

"Universal Credit is the key reason why RTI is being introduced"

Is it?

"Benefits

Providing payroll information in real time will bring PAYE into the 21st century. It will make PAYE easier for employers, pension providers and HMRC to administer and over time, more accurate for individuals.

Looking ahead, RTI will also support the operation of Universal Credit when it is introduced in October 2013."

That doesn't give the impression that it is the key reason.

 

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By ACDWebb
11th Jul 2012 18:03

As if

petersaxton wrote:

"Universal Credit is the key reason why RTI is being introduced"

Is it?

"Benefits

Providing payroll information in real time will bring PAYE into the 21st century. It will make PAYE easier for employers, pension providers and HMRC to administer and over time, more accurate for individuals.

Looking ahead, RTI will also support the operation of Universal Credit when it is introduced in October 2013."

That doesn't give the impression that it is the key reason.

 

HMRC are going to do monthly recs when they cannot do annual ones within 2-3 years. Will it honestly meet the aim to "make PAYE easier for employers, pension providers and HMRC to administer"

I suspect it's who is talking and to whom that determines the reasons given for introduction. Certainly Universal Credits is the impression given in a couple of presentations I have seen in recent months

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11th Jul 2012 18:22

Yes, I'm sure

There are other reasons for doing it, but UC is the reason it has been pushed through so quickly, with so much political pressure.  To me, that makes it the key reason why it is being introduced.

If RTI doesn't go ahead, Universal Credits fail and the government has egg on its face.  Politicians care a lot more about this than they do about making PAYE easier for employers (which I think is pure spin) or making it more accurate.  This has translated into a lot of pressure on HMRC to make RTI work.

The deadlines for RTI have been set according to UC requirements and most of the technical requirements for data items stem from UC.

One of the most troublesome requirements is that the data must be sent to HMRC "when or before" the employee is paid.  I believe the only reason HMRC want the data that early is so DWP can assess Universal Credits.

So in summary... Yes, I'm sure.

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11th Jul 2012 18:37

Chasing employers not paying

"One of the most troublesome requirements is that the data must be sent to HMRC "when or before" the employee is paid.  I believe the only reason HMRC want the data that early is so DWP can assess Universal Credits."

You don't think it could be because HMRC don't always know how much PAYE & NIC is outstanding until P35s are submitted? Knowing every month helps HMRC to deal with employers owing money quicker.

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12th Jul 2012 08:45

When or before

Having the information in a reasonably timely fashion does help HMRC assess the tax and NICs due - that's true.

The payment it isn't due until at least 14 days after the end of the tax month, so they don't need the data until then.  The rule could have said that RTI data must be submitted at the latest 14 days after the end of the tax month in which the payment falls.  That would be very sensible for the purpose of collecting tax and NICs, and reasonably easy for employers and their agents.

That's not what the rule says - the RTI submission must be made "when or before" the employee is paid.  To put it another way, you can't pay the staff until you've made an RTI submission.  HMRC say there will be guidance for what to do when HMRC's systems are down, but in normal circumstances you have to do the RTI submission first, before making the payment to the employees.  This is the rule that I think is troublesome, and I think it is only there for the purposes of Universal Credits.

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12th Jul 2012 11:52

Pay periods

Sorry - can I back up a bit? I am stunned by an earlier comment that under RTI we will only be able to run weekly or monthly payroll. We are a payroll bureau and we run all manner of periods -my understanding of RTI was that reporting had to occur on or before any payment was made. So, even on a monthly payroll, you could end up with a supplementary run and submission if you wanted to do what we currently call an advance. How does this sit with the notion of only weekly or monthly submissions? Isn't the point of this system that we inform HMRC every time we pay an employee - not that HMRC determine the times when we are allowed to pay them? It will cause utter chaos if we are really saying that for example 4-weekly runs can no longer happen. We find these are very common for certain European subs as this is the normal payroll cycle in many European countries. Can anyone clarify?

 

Further - I am interested to here that TAS are pulling out - not suprised. has anyone heard of any other software developers that are getting out?

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12th Jul 2012 12:53

Re: Pay periods

nikicaister wrote:

Sorry - can I back up a bit? I am stunned by an earlier comment that under RTI we will only be able to run weekly or monthly payroll. We are a payroll bureau and we run all manner of periods -my understanding of RTI was that reporting had to occur on or before any payment was made. So, even on a monthly payroll, you could end up with a supplementary run and submission if you wanted to do what we currently call an advance. How does this sit with the notion of only weekly or monthly submissions? Isn't the point of this system that we inform HMRC every time we pay an employee - not that HMRC determine the times when we are allowed to pay them? It will cause utter chaos if we are really saying that for example 4-weekly runs can no longer happen. We find these are very common for certain European subs as this is the normal payroll cycle in many European countries. Can anyone clarify?

My understanding is the same as yours - that there's no change to pay frequencies, only to reporting requirements.  The subject of advances is a bit more complicated because loans don't have to be reported, but I suspect you are right, that most advances will need to be reported (not 100% sure).

You won't be able to run the payroll quarterly while paying the employees monthly, which I understand is a common practice at the moment, but this thread is the first mention I've heard of banning quarterly or annual payments.

I'm pretty sure the legislation doesn't place any requirements on changing pay practices, and that's what counts.

When I read Patricia's earlier comment, I dismissed the idea as an ill-informed person at HMRC giving out wrong information at a conference, but I may have been too quick to jump to that conclusion.  I wasn't at the CIOT conference, but this view hasn't been given in any of the software developer meetings I've attended, and if it had, it would have been followed by a stunned silence, and then some very vocal objections!

 

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12th Jul 2012 13:31

Maggie Anderson

Steven Tucker wrote:

When I read Patricia's earlier comment, I dismissed the idea as an ill-informed person at HMRC giving out wrong information at a conference, but I may have been too quick to jump to that conclusion.  I wasn't at the CIOT conference, but this view hasn't been given in any of the software developer meetings I've attended, and if it had, it would have been followed by a stunned silence, and then some very vocal objections!

 

Maggie Anderson is the HMRC representative who has been attending meetings up and down the country advising and liaising on implementation of RTI.  Of all people she should be the most well informed person on the planet. 

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By ACDWebb
12th Jul 2012 14:09

According to

THIS DOC

Message Implementation Guidelines for PAYE Full Payment Submission (2013/14)

Data Item No 42 - Pay Frequency
Allowable values are:-
W1 (Weekly)
W2 (Fortnightly)
W4 (4 Weekly)
M1 (Calendar Monthly)
M3 (Quarterly)
M6 (Bi-annually)
MA (Annually)
IO (One-off)
IR (Irregular)

 

So with a normally monthly scheme it will be M1 with presumably IO if you make an advance that is not a loan and needs to be included on an FPS outside the normal M1 submission.

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12th Jul 2012 16:31

response- to confusion office holder / employee

In reply to comments - yes a director is an office holder

That is per company law. and the comments are correct in that respect. But we are speaking of one-man and two man small companies not non-executive or professional services directors.

If he or she is working for the company, especially as main or full time occupation, he or she is wearing a second hat and is also an employee. Employment is a matter of demonstrable fact- In law the company is a seperate employer person distinct from the working director, with whom company will have a contract "of" service, not "for" services.

If working director does not have an "Employment" law valid contract with the company how may you demonstrate to HMRC what is contracted in law salary and what is dividend? (apart from director's loan ac drawn on). That is apart from dealing with  benefits- especially vans.

Especially if you are unlucky enough to be picked for a PAYE inspection.

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12th Jul 2012 16:49

Salary?

"If working director does not have an "Employment" law valid contract with the company how may you demonstrate to HMRC what is contracted in law salary and what is dividend?"

If there's no evidence then HMRC can claim all payments are salary.

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13th Jul 2012 11:03

RTI for small companies

 

I am wondering if, when Maggie answered my questions at the CIOT conference in April, her advice was correct to the best of her knowledge at the time.  I have now contacted the AAM from our WT group with a number of questions which include pay periods and when I get a reply I will post the answers.

One of the questions that I have asked is which start date to use for employees not previously on the payroll as their earnings are below the threshold - is it the actual start date or the date that they are entered on the payroll?

I get the impression that while RTI is very much linked with Universal Credits however I can see that HMRC are going to gain a valuable insight into an area that they have not previously been able to when you consider the number of part time employees at present not on the payroll.

I have read with interest the posts on directors' status and the NMW.  To date HMRC have assured us that they will not enforce the NMW legislation on owner/managers however, was that that logic originally intended to support the owner manager who was struggling to get the business to take off and as such working lengthy hours for little reward? 

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By NeilW
13th Jul 2012 12:22

"Employment is a matter of

"Employment is a matter of demonstrable fact-"

 

No it's a muddled mix of fact and law.

 

Any employment between an individual and an entity that they control would be near impossible to show, since the individual would have to 'direct and control' themselves.

 

The simple fact is that technically directors of their own companies are always going to be under 'contract for services' with their own company because you just can't be 'of service' to yourself. 

 

The tax law then makes 'for services' contracts belonging to directors of companies subject to Employment taxation anyway. Hence why they have to file payroll. 

 

The interesting part would be the filing of hours. Filing of hours only applies to 'of service' contracts. There is no such thing in 'for services' contracts.

 

So how does RTI deal with 'for services' contracts required to be paid under PAYE due to legislation?

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13th Jul 2012 13:10

RTI for small companies

 

I have had some confirmation, not from HMRC (yet) but from both the CIPP and an employee taxes specialist that is speaking at a conference that I have organised for next year.

When Maggie said that the only periods that we could use were weekly and monthly she was correct at the time - this has changed since and two weekly, four weekly, quarterly and annual reporting is possible - I am advised that annual reporting is data entry 42 - MA.

However, every payment is indeed to be reported, so  those who, at present, have a quarterly or annual payroll run but who in reality divide this and pay estimated net pay in weekly or monthly amounts will have to report those weekly or monthly payments.  So I suspect that, although HMRC have altered the parameters to accomodate current payroll runs, Maggie's initial advice will turn out to be correct.

Every payment to every employee will have to be reported so the only way that I can see that this will work is that every employee will indeed have to be on the payroll, even if they are below the threshold. 

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13th Jul 2012 19:19

What is required

Looking through the RTI specification documents referred to above http://www.hmrc.gov.uk/softwaredevelopers/rti/mig-fps14.pdf makes interesting reading.

The hours normally worked is a mandatory field even though it is not part of the pay calculation for people on a fixed salary or indeed for directors.  I can imagine this is going to be a headache.

Fields which are not mandatory include "NI number" "date of birth" and "student loan deduction."  I am guessing the last one is needed if deductions are being made and is not mandatory because student loan deductions do not apply to everyone.

But what about NI numbers - since this is one of the things being checked in the "employer's alignment submission." 

And I have seen advice that employers need to check data against official documentation such as passports or birth certificates - does this mean getting employees to bring these in so you can check them again?

 

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16th Jul 2012 09:18

Optional fields

Huw Williams wrote:

The hours normally worked is a mandatory field even though it is not part of the pay calculation for people on a fixed salary or indeed for directors.  I can imagine this is going to be a headache.

Fields which are not mandatory include "NI number" "date of birth" and "student loan deduction."  I am guessing the last one is needed if deductions are being made and is not mandatory because student loan deductions do not apply to everyone.

But what about NI numbers - since this is one of the things being checked in the "employer's alignment submission." 

And I have seen advice that employers need to check data against official documentation such as passports or birth certificates - does this mean getting employees to bring these in so you can check them again?

Huw,

If you take a closer look at the hours worked field in the specification, you'll see it isn't quite as onerous as it first appears.  The original specification asked for the number of paid hours worked in that period, but after receiving feedback, they changed it so now you just need to say which band the normal hours fall in.  Apparently, this is what they need for assessing Universal Credits.

It is my understanding that student loan deductions must be supplied if deductions have been made, and that NI number is optional - the employee record can be matched by other means, although I'm sure HMRC would prefer it if you supplied it.  HMRC have been asked to clarify the circumstances in which the "optional" fields are mandatory, and I'm expecting more information to appear on the website shortly.

There are already rules that require employers to check documents to ensure that employees are legally entitled to work in the UK, and these haven't changed for RTI.  The specification includes a field for passport number, which caused some concern, but HMRC have since clarified that this field is optional - there is no need to enter the passport number into your payroll/RTI filing system unless you do so already.  I guess it is possible that in future years they may make it mandatory, but it isn't required for 2013/14, or for the pilot.

Steven.

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16th Jul 2012 12:00

Optional fields...

Thanks Steven

I take your points but:

1  Hours - this is an additional piece of information for salaried staff (ie we will have to collect and enter the information),  For directors (who are not employees paid the minimum wage) I can imagine this piece of information could create enquiries.

2  Idenditification - I realise that these are already required which is why I added the word "again" in my original post.  The question is whether moving to RTI requires additional checks - perhaps of the date of birth - which might mean calling the documentation back in again from existing employees.  Have you seen any requirements for this?

 

Huw

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16th Jul 2012 14:26

Checking records

Huw Williams wrote:

1  Hours - this is an additional piece of information for salaried staff (ie we will have to collect and enter the information),  For directors (who are not employees paid the minimum wage) I can imagine this piece of information could create enquiries.

2  Idenditification - I realise that these are already required which is why I added the word "again" in my original post.  The question is whether moving to RTI requires additional checks - perhaps of the date of birth - which might mean calling the documentation back in again from existing employees.  Have you seen any requirements for this?

Good points.  HMRC are advising employers to check the accuracy of their payroll records, in preparation for RTI. I think that's largely a validation exercise, to make sure HMRC's systems won't reject them.

Correction: HMRC advise at the bottom of this page that you should verify information against original documents: http://www.hmrc.gov.uk/rti/dip/get-payroll-right.htm

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14th Jul 2012 13:44

RTI for small companies

 

Indeed, Huw.  I have already advised my clients of the changes ahead and the information that I will need. Here is another link that you may find helpful:  http://www.hmrc.gov.uk/rti/employerfaqs.htm  - and as I mentioned in an earlier post we do have an event covering RTI in November - CIOT Mid-Anglia Branch, it is being held in Huntingdon.

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16th Jul 2012 12:40

RTI aside, I keep getting told by "friends" that if an employee is earning below the tax threshold he doesn't have to be included on the payroll at all.

Is there any basis for this?

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By Luke
16th Jul 2012 15:08

Patricia - Are CIOT events open to non-members?

.

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16th Jul 2012 18:01

RTI for small companies

First of all, yes Luke - non members are very welcome at CIOT events.

Now, RTI - I have just had a phone call from Maggie Anderson who has very kindly confirmed a few things.  You may indeed run a payroll fortnightly, quarterly or annually in addition to the weekly and monthly intervals mentioned.  However, this is only if they are genuine.  If you run a (eg) quarterly payroll but the employees are actually paid (say) monthly this needs reporting monthly. 

Re the directors' loans - you are NOT going to be able to use a directors' loan account and decide at the end of the year whether the amounts are a salary or a dividend you are going to HAVE to report it each time you take a payment.

Re lower paid workers - if you have ONE person on the payroll and you have other employees earning less than the LEL they are ALL going to have to go onto the payroll.

An important point to make here is that all reporting is done through the payroll.

If you have no employees earning over the LEL and have no PAYE scheme it will not be mandatory to report payments.

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By Vince54
20th Jul 2012 23:31

Re hours for directors: it is normal contracted hours that are reported, and the reporting is in bands.  There is a "Band D" option in the FPS which is "Other".  This is probably meant for use on FPS returns relating to pensioners, but there is no reason why it can't be used for directors or other employees who can't be slotted easily into one of the other bands.

Just to reiterate some earlier postings, if you have a PAYE reference then you will need to make a FPS return even though all employees earn below the the LEL.  And as Barry Mellor pointed out, in this situation you will need to make two returns.  The FPS followed by an EPS, to be submitted by the 19th of the following month, confriming that there are no payments of tax / NICs / student loans etc to be made this tax period.  Why HMRC can't work this out from the FPS...

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By chatman
12th Apr 2013 00:04

Does it matter if HMRC assumes your employee/director has left?

Does it matter if HMRC assumes your employee or director has left, and then discovers that they are back again at the end of the year?

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