HMRC seem to be waking up (slowly) ...

... but will their new found enthusiasm for some logic actually bear fruit?

Didn't find your answer?

A new Policy Paper was slipped out yesterday that surprisingly doesn't seem to have hit the headlines ... despite being promoted as "This measure is about changes to the data HMRC requires from employers, some shareholders in owner-managed businesses, and customers who are self-employed".

The details (including the draft legislation) is at https://www.gov.uk/government/publications/change-to-data-hmrc-collects-...

And a brief(ish) overview?

.

"This measure confirms that from no earlier than tax year 2025 to 2026, employers will be required to provide more detailed information on employee hours worked using Real Time Information PAYE reporting.

Secondly, shareholders who are company-owner managers in owner-managed businesses will need to use their Self Assessment tax return to provide both:

* the amount of dividend income received from their own companies separately to other dividend income; and

* the percentage share they hold in their own companies.

Finally, customers who are self-employed will need to provide information on the start and end dates of their self-employment using their Self Assessment tax return."

.

As usual the intended logic is fairly compelling, but the underlying assumptions plumb new depths in the woeful stakes.  For instance:

"Employee hours worked" - "Negligible cost impact (assuming all businesses are keeping records of hours worked and there is a one-off need to amend RTI processes in year 1)"

Despite what HMRC (wish to) believe and the perceived need for showing NMW compliance, I've encountered close to zero employers who maintain 'hours worked' figures other than for hourly-paid staff ... so neither the admin burden nor the recording technology are likely to impose a zero cost.

Oh and it won't particularly help with NMW since, as one hopes HMRC would know, 'hours worked' can have a different definition (in terms of the NMW calculation) to that used for paying people.

.

How do they simultaneously take so long to address fairly simple issues, whilst then yet again making the wrong assumptions when planning the way forward?

Replies (15)

Please login or register to join the discussion.

avatar
By Hugo Fair
19th Jul 2023 14:41

Having checked back, since these changes are fewer than I remember being in the Consultation at https://www.gov.uk/government/consultations/improving-the-data-hmrc-coll...
... it turns out they've dropped other proposals for collecting data on:

* the business sector of the self-employed
* the occupations of employees and the self-employed
* the location(s) of an employment or a business

Mind you, the consultation (published less than 15 months ago) was still saying "From April 2024, 4.2m taxpayers will keep digital records and use third party software to submit their income tax Self Assessment returns"
... partly as a justification for why the changes are 'needed' - and partly because this 'means' no extra costs (as they are already being incurred for MTD ITSA)!

Thanks (2)
By SteveHa
19th Jul 2023 15:10

So more information that won't make a discernible difference to HMRC, and that they won't do anything with, but is designed to increase the compliance burden on already compliant taxpayers.

Thanks (2)
avatar
By JB101
19th Jul 2023 15:55

How will I be able to work out the hours I work eg:

I'm off to play cards tonight (very friendly games with no money and minimal bragging rights involved. I've picked up a few ad-hoc tax jobs and similar jobs in the past so am I working every time I go along? Should I just include the time I spend talking about if I can help? What about the time spent travelling to cards?

How about when I lie awake at 2am thinking about a complex job I'm working on - is this time spent "working"?

Thanks (1)
Replying to JB101:
avatar
By Hugo Fair
19th Jul 2023 18:32

Quite ... and even more prosaically, for a (travelling) employee of one of your clients who is paid an unvarying salary:
- do the 'worked hours' include all travel time (even if not all are paid)?
- is each 'worked hour' worth one hour (even if it was swapped for Bk hol worked)?

I could go on ... but ultimately who will record the hours / who will check & approve the hours / who will get the values into each payrun in time for RTI / etc?
Will you be expected to submit corrected values later if you originally had to guess in order to hit the RTI deadline?

Thanks (2)
By ireallyshouldknowthisbut
19th Jul 2023 16:03

"Finally, customers who are self-employed will need to provide information on the start and end dates of their self-employment using their Self Assessment tax return."

Er, thats already on the form!

On the shareholding, I wonder how they will deal with it when the %'s change mid year.............but that has not been considered. Or indeed different share classes.

As for hours, pftt. That will just be made up. No other rational way of doing it. I have no idea how many hours I work other than "lots more than 37.5 hours a week"

Fundamentally any box that does not affect the tax due is just "data collection" and treated just as those forms are from national statistics. ie any old tosh will do.

Thanks (2)
Replying to ireallyshouldknowthisbut:
avatar
By Hugo Fair
19th Jul 2023 18:20

Agree with all that ... but I only gave some of the edited 'highlights' (lazy? me?)

But "Er, that's already on the form!" ... with reference to providing start and end dates of their self-employment:
- the reason it's a change is because this is currently optional data, but the change will be to make it mandatory.

[Don't ask me how you make a data item mandatory even when there's no value to report this year - but HMRC usually get all the details sorted in time, don't they!]

Thanks (2)
Replying to Hugo Fair:
avatar
By Catherine Newman
20th Jul 2023 10:43

My PTP software would throw a wobbly if the dates weren't in there.

Why does HMRC think that anybody paying a salary to an employee needs to know the hours worked. What information do they think they are going to get.

I remember the days of manual timesheets when most of Monday morning was admin adding up and re-adding up columns at 6 minute units, made slightly better when automated.

Computers were literally coming in when I started closely followed by the dot matrix or daisy wheel printers.

Thanks (1)
Replying to Catherine Newman:
avatar
By Hugo Fair
20th Jul 2023 13:17

Good for PTP ... I too used to apply 'rules' more strictly in software we developed than what was demanded by HMRC (particularly where it might be thought of as more vigorous validation that would prevent problems cropping up downstream).

A similar example to this one was when we made 'Pay ID' mandatory within an FPS, despite the HMRC idiocy of saying it is highly recommended but optional!

Thanks (3)
Replying to Catherine Newman:
avatar
By Hugo Fair
20th Jul 2023 13:30

"Why does HMRC think that anybody paying a salary to an employee needs to know the hours worked?"

Who knows is the answer to your question (which I doubt crossed the collective mind of HMRC) ... but they did provide this (frankly laughable) 'justification' in the earlier consultation:

"Why better data is needed.
The labour market continues to undergo fundamental change, and it is important that government has access to data that can allow it to understand and react to these changes.
Having a more detailed understanding of the hours that employees work would help with the analysis of labour market trends across government.
It would help improve government interventions in the labour market through increasing our understanding of both voluntary part-time work and underemployment.
While the structures used to remunerate work continue to diversify, holding information about the employed population (those whose earnings are subject to PAYE) provides the richest data given it covers the largest proportion of the population.

In addition, the National Living Wage (NLW) and National Minimum Wage (NMW) are among the most important employment rights, and HMRC is currently responsible for enforcing them (though the Department for Businesses, Energy and Industrial Strategy has proposed consolidating NLW/NMW enforcement as part of a Single Enforcement Body for the labour market).
HMRC already has information on the amount paid through RTI but does not currently have sufficient detail on employee hours to calculate an hourly rate.
For the purpose of this consultation, we refer to employees as those whose earnings are subject to PAYE."

So 'justification 1' is purely (non-tax) policy assistance; whilst 'justification 2' is (as I mentioned earlier) codswallop - as 'hours worked' for pay and for NMW are not always the same thing.

Thanks (3)
avatar
By Tax Dragon
20th Jul 2023 06:37

We still use timesheets.

Just us?

Thanks (0)
Replying to Tax Dragon:
avatar
By JB101
20th Jul 2023 08:34

For "hours worked" outside the normal day?

Thanks (0)
Replying to JB101:
avatar
By Tax Dragon
20th Jul 2023 08:45

Have you read the draft legislation?

Thanks (1)
Replying to Tax Dragon:
avatar
By Catherine Newman
20th Jul 2023 10:49

I have now. It just says the Commissioners "may" require and they may only require the information that ascertains the correct amount of tax.

Thanks (0)
Replying to Catherine Newman:
avatar
By Hugo Fair
20th Jul 2023 13:10

Think you may have looked at the wrong part of the draft ...

(4) In Chapter 6 of Part 11 of ITEPA 2003 (pay as you earn), before section 708
insert—
“707A Provision of additional information to His Majesty’s Revenue and Customs
(1) PAYE regulations may include provision requiring an employer to provide any information that is specified or described in regulations made by the Commissioners (whether or not that information is also relevant to the assessment, charge, collection and recovery of income tax in respect of PAYE income).
(2) The Commissioners for His Majesty’s Revenue and Customs may only specify or describe information in regulations under subsection (1) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1 of TMA 1970.”

Thanks (2)
avatar
By steve 12321
20th Jul 2023 16:04

Why don't they look at getting some Covid fraud money back and stop all the other silliness first and foremost (inc the MTD nonsense)

Thanks (0)