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RTI questions we couldn't find answers

RTI questions we couldn't find answers

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Hi

I have a few questions, which I am sure others do have, about RTI in practice and I should be grateful if anyone knows the answers as I cannot find any definite answers anywhere.

1. FPS to be filed on/before payment of wages. Is there any HMRC deadline for filing an FPS (if not, how will HMRC known if FPS has been filed after the payment to employees, especially with wages paid cash)? On the same note, we are sending out RTI letters of engagement and asking employees to set a wages payment date by which they are expected to report to us, failing to do that we have no responsibility to chase them. 

2. Penalties for late filing: have these been set?

3. Penalties for inaccurate returns (for 2014/15): will there a penalty be imposed on payrolls where there is late filing or error return but no PAYE/NIC liability (e.g. low paid directors or employees below NI thresholds?

4. We are thinking of converting all weekly payrolls into monthly to avoid having to increase fees for extra work in obtaining employers' approval before filing, filing time etc (at least we will have the hassle once a month). Any others done the same or any other ideas how to minimise additional costs/fees although I believe those cannot be eliminated?

4. To avoid the problem of late filing, could the employer treat payments to employees as loans and deduct from pay when they make the next payroll run?

5. We have a number of temps agencies for whom there is no fixed or expected number of hours worked each week and they cannot put in one of the given ranges (0-16, 16-30 and so on) because they fluctuate signifinacltly each week. would it be acceptable by HMRC to put those into the "other" range or do we have to inpout the actual hours each week before FPS filing based on the actual hours worked by each temp? 

Many thanks

Replies (31)

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Euan's picture
By Euan MacLennan
04th Mar 2013 11:48

Some comments

1.  The pay date on the payslips is part of the FPS.  If the FPS is filed after the pay date, even HMRC's computer system will be able to detect that it is late.

4(a).  You cannot just choose to run people who are paid every week as a monthly payroll, because you have to file a FPS on or before each weekly payment.  You must get the employees' agreement to being paid only monthly.

4(b).  There has been quite a bit on this.  In-month advances are a payment in themselves and would have to be reported on a FPS.  If you actually lend employees money, perhaps to ease them from weekly to monthly payment, and have a loan agreement under which they repay it over a period of months, it might be alright.  If you can run the payroll and file the FPS before the first advance, there is nothing to prevent you from paying advances followed by a balance at the end of the month.

[EDIT] Have a look at Is someone at HMRC taking the p*ss?

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By George Attazder
04th Mar 2013 11:33

Filling in the gaps

2. No. The legislation defers to regulations which haven't yet been issued. If I had to guess, I'd expect the regulations to say £100 per 50 employees (or part thereof) per month (or part month) of lateness.  If I'm right, they're not going to break that news any earlier than they have to.

3. The penalty is a percentage of the potential lost revenue. You work it out!

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By Jane Dance
04th Mar 2013 12:06

I file FPS already.  Not sure what all the fuss is about or how you would file before you pay employees.  I calc payroll, print payslips, pay employees and then leave for a week.  The following week, after any alterations, I run and submit FPS for the previous week and then update payroll which resets for the week I am about to enter.

 

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By neiltonks
04th Mar 2013 13:06

On or before

Jane;

The law requires the FPS to be sent on or before the date on which the employees are paid. Your approach doesn't seem to comply with this.

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Out of my mind
By runningmate
04th Mar 2013 13:19

Computer says no

Can someone remind me of the date when HMRC will switch their computers on to accept RTI submissions after 6 April 2013?

Cheers!

RM

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Replying to Portia Nina Levin:
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By matttaxnpayroll
06th Mar 2013 12:26

Computer says yes

runningmate wrote:

Can someone remind me of the date when HMRC will switch their computers on to accept RTI submissions after 6 April 2013?

Cheers!

RM

 

It's 6 April. :)

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By Jane Dance
04th Mar 2013 13:47

Not the way it works for us

I will speak to our software provider but are you sure you are interpretting this correctly... using logic how on earth would tax and NIC be due on something which hasnt actually been finalised and paid?  Can you give me a link to the law you refer to neiltonks.

 

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Replying to Mister E:
Tom McClelland
By TomMcClelland
04th Mar 2013 13:56

Filing, not tax due

Jane Dance wrote:

I will speak to our software provider but are you sure you are interpretting this correctly... using logic how on earth would tax and NIC be due on something which hasnt actually been finalised and paid?  Can you give me a link to the law you refer to neiltonks.

 

When the tax is due has nothing to do with it.

FPS must be filed on or before the date when the employees get paid. HMRC is expecting to enforce this rule rigidly.

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By lh3f9764bg1g
06th Mar 2013 11:51

Lying Week and LEL

Most of our employees are paid on a lying week basis and we are notified of hours worked on Saturdays. If we run the payroll on a Saturday (let's say 20th of April) would it be okay to have the payslips etc. dated the following Friday (26th April) but to file the FPS on the date that we actually process the payroll (i.e. in this example on Saturday 20th April)?

Also - we have a couple of employers who have (quite young) employees who work short hours and don't earn anything like as much as the LEL. Do we have to process these employers/employees under RTI?

 

Chris.

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Replying to carnmores:
Tom McClelland
By TomMcClelland
06th Mar 2013 12:07

1. FIling FPS early 2. Young employees

lh3f9764bg1g wrote:

Most of our employees are paid on a lying week basis and we are notified of hours worked on Saturdays. If we run the payroll on a Saturday (let's say 20th of April) would it be okay to have the payslips etc. dated the following Friday (26th April) but to file the FPS on the date that we actually process the payroll (i.e. in this example on Saturday 20th April)?

Also - we have a couple of employers who have (quite young) employees who work short hours and don't earn anything like as much as the LEL. Do we have to process these employers/employees under RTI?

 

Chris.

Filing FPS early (ie before payment) is fine.You must file FPS for all paid employees except employees aged below 16 and earning below LEL. (eg paper boys/girls do not have to be filed)

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Replying to Red Leader:
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By matttaxnpayroll
06th Mar 2013 12:24

Paperboys

Tom, could you point us to something in writing to confirm about paperboys?  I have a couple of newsagents who would be pleased to hear they don't have to file for them.

 

Thanks,

Matt

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Replying to bassanclan:
Tom McClelland
By TomMcClelland
06th Mar 2013 19:32

Paperboys

matttaxnpayroll wrote:

Tom, could you point us to something in writing to confirm about paperboys?  I have a couple of newsagents who would be pleased to hear they don't have to file for them.

 

Thanks,

Matt

I asked the specific question of the Developer Support Team at HMRC because it came up in another thread here, and I got this response:

HMRC wrote:
This has come up before and the response advised by the RTI programme is as follows:

“If the paper boys/girls are under 16 then there is no need to include these on an FPS as they cannot claim Universal Credits".

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Replying to carnmores:
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By matttaxnpayroll
06th Mar 2013 12:20

Just to clarify

If you run the payroll and file the FPS early (in your example on the Saturday) abd then pay later (the following Friday) that is fine.  You could, in theory, file everything in advance for the whole year on 6 April, as long as you are filing 52 or 53 weekly FPS's.

 

If ALL of the employees are paid below the LEL and you have a P46 (or whatever they are calling the new equivalent) ticked at boxes A or B by every employee, and they consequently have no tax or NI liability, then there is no need to have a PAYE scheme for that employer so you wouldn't have to file under RTI.

However, if ANY employee "fails" those points, then a scheme is required, RTI is required and ALL employees must be included in your FPS, regardless of how much they are paid.

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By lh3f9764bg1g
06th Mar 2013 12:54

Tom  . . . Matt . . . . . .

Tom  . . . Matt . . . . . .

Thanks for your replies but I just want to check . . . . .what is the position where (say) there's just one employee who is OVER 16 but is paid UNDER the LEL?

 

Chris.

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Replying to thevaliant:
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By matttaxnpayroll
07th Mar 2013 09:42

@ Chris - ih3f9764bg1g

lh3f9764bg1g wrote:

Thanks for your replies but I just want to check . . . . .what is the position where (say) there's just one employee who is OVER 16 but is paid UNDER the LEL?

 

 

Chris, my original email should still stand in this situation.  If that employee has no liability to tax (i.e. they don't have a P46 ticked at box C or a tax code with net allowances smaller than their pay), then the PAYE scheme could be closed (assuming there is one in the first place) and nothing to report under RTI.

 

As I said before, if that situation changes then you would have to re-register and then begin reporting in RTI.  Tom has confirmed that under-16's paid below LEL don't have to be reported: 

I asked the specific question of the Developer Support Team at HMRC because it came up in another thread here, and I got this response:

HMRC wrote:

This has come up before and the response advised by the RTI programme is as follows:

“If the paper boys/girls are under 16 then there is no need to include these on an FPS as they cannot claim Universal Credits".

 

Matt

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Replying to thevaliant:
Tom McClelland
By TomMcClelland
07th Mar 2013 12:03

One adult employee, but paid below LEL

lh3f9764bg1g wrote:

Tom  . . . Matt . . . . . .

Thanks for your replies but I just want to check . . . . .what is the position where (say) there's just one employee who is OVER 16 but is paid UNDER the LEL?

 

Chris.

 

In that situation there is no need to report anything unless a PAYE scheme exists. If a PAYE scheme exists then the payments to that employee should be reported.

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Replying to thevaliant:
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By LloydLedger
07th Mar 2013 17:46

Just I employee who is OVER 16 but is paid UNDER the LEL?

From the legislation it seems the company would not even need to have a PAYE scheme and so not need to submit - but would like to hear what Tom and Matt say on this...

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Replying to Slim Freddie:
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By matttaxnpayroll
08th Mar 2013 13:24

@ LloydLedger

LloydLedger wrote:

From the legislation it seems the company would not even need to have a PAYE scheme and so not need to submit - but would like to hear what Tom and Matt say on this...

As per my post earlier, you are right that there is no need to have a PAYE scheme if the employee is paid BELOW the LEL regardless of their age, provided there is nothing that could cause them to have a tax liability under PAYE - e.g. second job or state/private pension that would be coded out (box C on the P46).

The under 16's would, I am led to understand, not have to be reported even if a scheme exists, as long as they would not have any liability (as I read someone post elsewhere recently, we all have to pay tax from the day we're born to the day we die, and often beyond). 

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Replying to SteveRA:
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By LloydLedger
08th Mar 2013 14:36

If no PAYE Scheme then what implications for Personal Tax return

Thanks Matt - following on from needing no PAYE scheme - what would they give as a PAYE Ref on their SA100? Surely it can't be left blank? :-/

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By shoshana
06th Mar 2013 13:04

Late filing and inaccuracy penalties

Draft legislation was issued on 11 December covering these penalties.

Late filing penalties will start from 2014/2015 tax year.

Inaccuracy penalties will operate in the same way as for all other taxes (careless, deliberate etc) and start from 6 April this year.

Late payment penalties from 2013/14 will not be cumulatively assessed as they are now. First late payment will not be a default. The next 3 defaults in the year would have a penalty of 1% each, the following 3 would have a penalty of 2% each, then 3% for the following 3, then 4% for the next 2. This means HMRC can assess penalties each month and do not have to wait until the end of the tax year - it also means smaller penalties going forward.

More details at http://www.hmrc.gov.uk/budget-updates/11dec12/tax-administration.pdf

HTH

Malcolm

Malcolm Greenbaum

Director, Greenbaum Training and Consultancy Limited

IFRS, US GAAP, UK GAAP, UK Tax and VAT

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
06th Mar 2013 19:18

late payment penalties

I checked with HMRC regarding the switch from old late payment penalty (raised after the end of the year) to the new late payment penalty (which will be in FB 2013) and how that would work. I was advised that the old system will apply throughout 2013/14 and the new ones will kick off in April 2014. This is a pity as you coprrectly say that the penalties will reduce under the amended regulations.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
06th Mar 2013 19:22

Nobody answered 5

When you come to pay the staff, surely you then know what hours you are paying for? Assuming they are paid an hourly rate. So your software needs to capture this number of hours so that the hours worked flag can be correctly set each week. It is fully recognised that this will vary from week to week for some employees, - and that bthis may affect their benefit entitlement. But you need to report the correct band of hours, and no you can't use "other" - this is reserved for pensioners.

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Replying to Cheshire:
Tom McClelland
By TomMcClelland
06th Mar 2013 23:05

...

 

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Replying to MGD:
Euan's picture
By Euan MacLennan
08th Mar 2013 11:57

You have to enter something

janefg wrote:

I was informed by my software supplier (IRIS) that I only needed to put in the hours worked for those staff who are claiming benefits.  Is this correct?

I believe that it is a mandatory field (for UC purposes), so you have to enter something.  You have a choice of four bands - <16, 16-30, 30+ or Other.

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Replying to MGD:
Tom McClelland
By TomMcClelland
08th Mar 2013 12:16

Working hours.... wont work?

Euan MacLennan wrote:

janefg wrote:

I was informed by my software supplier (IRIS) that I only needed to put in the hours worked for those staff who are claiming benefits.  Is this correct?

I believe that it is a mandatory field (for UC purposes), so you have to enter something.  You have a choice of four bands - <16, 16-30, 30+ or Other.

The software must supply an answer, but maybe Iris is filling in a default answer if the operator doesn't enter a banding. One solution would be to derive an answer from actual hours recorded in the software and file "other" if none are supplied. But quite how Iris would think that an employer (or bureau) is supposed to identify whether or not their employees are claiming benefits and just supply a "proper" answer for them, I have no idea.

I have more than a sneaking suspicion that the "normal hours worked" submissions are going to be completely and utterly useless for their supposed purpose of monitoring working hours of benefit claimants. The concept of "normal" hasn't been defined, and most employers (and dare I say most practices and bureaus) won't be understanding or caring about what DWP is trying to achieve. I'm visualising for example a casual worker at a large chain of stores. The payroll/HR person setting up that person's employment record is going to have zero idea of how many hours that person is likely to be offered or accept. If might be 2 hours a week. It might be 40, and indeed it may vary wildly over time. So they'll all end up as "Other". There are hundreds of thousands of such casual workers in large businesses, and I suspect that often these will be the very people also in receipt of work-limited benefits.

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By George Attazder
07th Mar 2013 09:02

WTF?

The reporting of "hours" isn't of hours actually worked it's of hours normally worked. It is only appropriate to use "other" for pensioners and the like who don't normally work any hours, for evreybody else, it should be based on the mode average. That's what normally means.

I can't believe that people are (i) finding it all so difficult and (ii) placing so much store on HMRC's viewpoint who frankly haven't got a friggin' clue.

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Replying to pollypetee:
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By geroge
07th Mar 2013 10:24

What about casuals

George,

What about casuals who may work 2 hours one week, and then not work again for 5 weeks when they work 20 hours?

Over what period is it suggested the hours are averaged and why?

For these people, there is no normal number of hours - so 'other' isn't only appropriate for people who don't normally work.

 

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By Jane Dance
06th Mar 2013 23:04

My concerns are about more than just RTI

Have spoken to my software provider (who is involved in the pilot) and so long as FPS is sent within a reasonable time ie before the next weeks calcs (soz didnt ask about monthly) that HMRC are happy with this. 

Regarding hours, I had a look at the info in a test submission today and the bandings for hours - up to 15.99, 16 to 29.99, and 30+ were calcd automatically. 

I am told that it is DWP who are interested in these figures especially those working 16+ hours a week.

How soon will it be however, before Working time Regs want to get involved or VOSA for drivers hours. 

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By lh3f9764bg1g
07th Mar 2013 10:23

cheers Matt

Thanks, Matt . . . . . this should mean that I'll be able to get a couple of schemes closed.

Cheers.

Chris.

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Euan's picture
By Euan MacLennan
07th Mar 2013 10:43

Casual workers

I really don't think it matters, but I would suggest that such infrequent workers are marked as <16 hours a week and that the irregular payment field is ticked on every FPS in which they receive no payment.

You might be interested to read how Moneysoft will deal with irregular payments.

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Replying to michaelblake:
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By geroge
07th Mar 2013 11:49

Euan, we are told the hours data is for universal credit purposes, so it will mattter (currently at at any rate) for staff who will be eligible. On that I do not know enough about UC to know what difference it makes.

However, an infrequent worker (= casual) would only be marked as < 16 where they 'normally' work < 16. There will be cases where hours vary wildly and there is no normal pattern to speak of and I believe the correct category is 'other'.

All casuals would need to be marked 'irregular' irrespective of above, assuming there are weeks where they don't work at all. I interpret irregular to mean not paid at all sometimes rather than someone whose wages vary.

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