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RTI submissions and SMP

We have a small business client with half a dozen or so on the payroll. Their earnings are very low as it is a small shop and the directors work there practically every day to keep staffing requirements to a minimum.

During 2013-14 one of the directors has been on maternity leave and claiming SMP. The SMP (with compensation) has meant that until recently, the monthly deductions due to HMRC were negative. We ran the payroll as required and submitted the FPS and EPS to show that no payment was due for the month.

Maternity has now ended and deductions have returned to their previous level however a credit has built up on the clients account that will cover all their deductions this tax year (and a good few months more). Now that we are running the standard payroll, the FPS is indicating payments are due to HMRC but surely this is not the case due to the previous months? Should we be filing an EPS on the grounds that the client will not be paying the figure shown on the FPS? If so, how?

Our software provider indicated we should simply "cover" the deductions due by putting the relevant figure in an EPS submission under "SMP rec". I'm worried this will duplicate the SMP on HMRC's records.

Can anyone direct me at how this should be dealt with?

Thanks.

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EPS is YTD figures

The figures transmitted on the EPS for SMP (both recovery and compensation) are total year to date figures.

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EPS

"We ran the payroll as required and submitted the FPS and EPS to show that no payment was due for the month."

It may depend on your software, but I didn't think that you could file an EPS just to say that no payment was due (except where no FPS had been filed) - you have to give a reason for adjusting the figure on the FPS.  Are you sure that you were not filing the EPS each month in order to claim the SMP recovery, resulting in no payment being due?  If so, you should not file any further EPSs to avoid duplicating the SMP recovery and you should just file the FPS each month in future to chip away at the overpaid PAYE balance.

What software are you using?

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@euan

Euan MacLennan wrote:

you should not file any further EPSs to avoid duplicating the SMP recovery

As the EPS SMP figure is a YTD figure you have worried me say thatl resending it cause duplication. If I transmit in November that my YTD SMP recovery is £5,000 and then I do the same in December and January repeating the YTD recovery of £5,000, do you think that will cause problems ? I would hope not.

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You are correct. We were filing EPS each month declaring the SMP recovery (which resulted in no payment being due). Confusion with RTI language!

We're using IRIS Payroll Professional.

If we simply file the FPS showing a liability (as it does not show the overall account position) and then no payment is made, are HMRC not going to chase that one month in isolation? Whilst I agree with what you're saying about duplicating the SMP recovery, I thought HMRC guidance required an EPS to be filed if the amount on the FPS and the amount you would be paying differed.

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Who knows ...

... what HMRC's system for processing RTI may come up with, but your last SMP recovery EPS stated not just that month's figure, but also the YTD figure, and that figure remains on the client's PAYE account as an overpaid balance of PAYE.  Subsequent FPSs will merely reduce the overpaid balance and no payment will be expected.

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@euan again !

Euan MacLennan wrote:

but your last SMP recovery EPS stated not just that month's figure, but also the YTD figure

Unlike FPS, I thought the EPS only had the YTD figure, no figure for the month/period.

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Always YTD

HMRC look at the YTD figures from both the FPS and EPS submissions. You only need to file an EPS if you have new recoveries to report. If you've filed recoveries previously that exceed liabilities, they'll know when something is due again based on the figures from the FPS.

If you do file an EPS again, it won't do any harm but it also won't make any difference. They take the YTD recoveries from the last submission and replace anything you've filed previously; the end result will be the same as if you hadn't re-sent it at all.

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Thanks everyone. I was pretty sure I knew the position but it doesn't hurt to check. Fingers crossed it'll all work out in the end.

Does anyone know if the year end credit can be reclaimed on the final FPS submission?

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@Dave

I have just checked the EPS specification and all the figures are indeed YTD only, so you are right, but then, do I recall that you have something to do with payroll software?  My excuse is that decent payroll software (Moneysoft!) produces an EPS report with two columns - this period and YTD.

Obviously, this means that you can go on filing EPSs for every subsequent month in a tax year without risk of duplication, but why would you bother when you have no new information to report?  Whatever turns you on! :¬)

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@euan

Yep, we do payroll software, so I have my own understanding of what is meant to happen. Reality is often different and I was concerned you had uncovered a quirk of the HMRC systems I was not yet aware of (rather than the many quirks I already know about !)

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