Well in advance of RTI commencing I took action for two client (micro) employers that were going to have a genuine significant problem in complying with the on or before rule. I discussed my thoughts anonymously with HMRC at great length and was told that what I was proposing was acceptable. Now faced with having to provide a reason for a late submission, I'm told by HMRC that what I'm doing doesn't work and the employers have 5 months to change or face penalties.
In both cases, the official pay date wasn't altered so as to avoid changing the pay period of 4 weeks. However, the employees were asked if they minded being physically paid the following week (always 7 days later). All were happy to oblige (there definitely wasn't any coercion), and this gave the employers time to calculate the wages (including a commission element), for the RTI submission.
I started this arrangement in April 2013 and received no late-submission notices until a couple for each client in around months 7 and 8 of 2013/14. I queried them with HMRC and was told that from what appeared on their screens, the submissions were not late. I received no further notices.
I now find that I am having to provide a reason for late submission when I wasn't aware that they were late. As an example, the "official pay date" of one employer was Sunday, 27th April. The employee will be paid on Sunday, 4th May. The submission was submitted on 3rd May, but apparently it is late.
HMRC has stated that the arrangement that delays payment to the employees effectively changes the week for which the payroll should be processed (to week 5 from week 4). They say that an EPS should have been made for weeks 1 to 4 and that an FPS is due for week 5.
Does an arrangement as described really change the timing of the payroll run? I have always been aware that the pay date dictates the week or month for which the payroll should be run, but have never given a thought in the past to the effect of employees receiving their pay a few days later due to logistics.
(I have a third client employer who pays monthly and who has a member of staff that works mostly on a Tuesday, but occasionally does a little overtime on other days. The employee gets paid (in cash, not cheque nor BACS) "next time he's in", invariably on the following Tuesday. But if he's just passing prior to the next time he's in, he can get paid then. For example, he will be paid on 6th May for work up to 30th April but may pop in on 3rd May and collect his cash. I have always managed to submit the FPS by the last day of the month so have never had a problem. But it seems that I need to know the date he is physically paid, check in which tax month it falls and process the payroll accordingly? That can't be correct can it??)