Does it matter if HMRC assumes an employee has left when he hasn't?

An interesting question that I've been wondering about too.

I've been wondering about this for a while. Not just for directors. For all casual employees too, or temps for example.

There is this RTI notion that if you don't file RTI for a while for an employee and you didn't tick their "irregular payments" box HMRC will make them a leaver....

I'm uncertain what the practical effect of this is. They aren't going to reject your RTI submission 3 weeks later that includes a payment to that person with those employment details. Somehow I don't think they're going to send employers letters telling them about employees who have been removed and who should have P45 documents issued. If HMRC chases employers every time this happens they literally won't have any time to do anything else.

I smell a rat in this though.

Why is there an assumption by HMRC that an employee has left if after 3 months there is no activity on their payroll account without demanding that a P45 be generated for them (which is the case)?

There must be an ulterior motive for this. Damned if I know what it is.

Getting the tax code correct in-year

The reasoning that HMRC have given for doing this is that if they receive an FPS from a different employer with starter information for an individual they will not issue a BR tax code if they have not received any FPS submissions from a previous employer over the previous 13 weeks, because they will assume the individual has left that previous employment.

I asked Moneysoft about this....

....as I couldn't find an irregular payments button, they said it was their understanding that HMRC wouldn't assume an employee had left until told otherwise, and the irregular payment is sent automatically by the software.