AccountingWEB members have been voicing frustration this week after receiving end-of-year reminder letters from HMRC for clients whose P35s have already been filed online.
Rkpgreen had120, and jonster 102 reminders - “one for every one of my payrolls”, all of which were filed by 10 April.
As Rebecca Benneyworth explained in the discussion group, the reminders are designed to reduce the number of late filing penalities as part of the service improvement initiatives agreed between HMRC and the professional tax bodies.
The approach was set in motion by a series of tribunal verdicts (HOK at al) where employers who were not aware they had to complete year-end PAYE forms because they don’t access to electronic mail successfully appealed against compound penalties issued several months later.
“It is cheaper to mail everyone (provided the tone of the letter is correct) than to pick through and sort out the ones who need one, and in any event, it is not possible for HMRC to know what is filed and what isn't until much later in the year (hence £400 initial penalties) because of the systems for processing P35s,” she explained.
It is worth noting at this point that the letters are clearly reminders rather than warnings, and clearly state at the end: “If you have already filed your return online or told us that a return is not due, thank you; no more action is needed. If you have not, please act now.”
Praising the wording used in the letters, Benneyworth added: “Representatives of accountants in practice agreed that this was a good way to go to prevent unsuspecting employers from getting big penalties... There will be a further letter in early June warning those who ‘appear’ not to have filed by then that they have a £100 penalty and need to get moving to avoid further penalties - again to stop the first word being £400. HMRC has worked hard with the profession to deal with something which has been difficult for employers. Please try to see it in that light.”
The explanation failed to pacify some AccountingWEB members, who complained about:
- The impression on clients who assumed their accountant had filed the form on their behalf
- The need for advisers to go back and confirm their P35 submissions had been successfully received
- The two-week time lag between the date on the letters - Sunday 29 April - and their arrival through the post last week.
Wblewis, who started the Working Together thread, offered a succinct overview of the prevailing opinin among AccountingWEB members: “Sending out these reminders was a poorly thought out attempt to cover up for systems and procedures that were not fit for purpose.”
Peter Saxton thought HMRC should be able to ask employers how they want to receive communications by specifying either paper or email, which would reduce the cost and waste of the exercise. And if HMRC doesn’t know which returns have been filed and when, “Why should HMRC penalise employers for something they are incapable of doing themselves?” he added.
While HMRC’s intentions are good and have the support of the professional bodies, the credibility of its penalty communications strategy has been stretched by a string of episodes reported on episode, with the dispatch of 12,000 mistaken SA penalty notices taking place just a week before the P35 reminders were raised.
Answering the query Did I file too early? Juliekpb warned of another PAYE problem at this time of year: “HMRC have randomly closed a good number of those schemes where we filed early. We have had all sorts of problems trying to sort this out.”
Progress report on joint service quality initiative
Since the group first convened in December, HMRC agreed a number of initiatives that it would deliver by 31 March 2012. In addition to steps to reduce PAYE penalties, which include the recent reminder letters, it has also:
- Launched an email pilot services - following positive feedback from the first 15 guine pigs, another 200 agents have been brought into the experiment.
- Created a single point of contact for those handling the Self Assessment and PAYE affairs of people who have died. A revised form R27 allows executors to authorise HMRC to share data with named agents.
- Improved communication with agents and strengthened its agent account manager programme. Further online channels are being explored.
- Undertaken a review of bulk mail processes. A new PO Box number has been set up for local compliance and “Post processing and response times will continue to be key areas of focus for the initiative”, HMRC said.
- Reviewed processing of 64-8 agent authorisation forms. As a result of the review, HMRC plans to re-engineer some of its processes, with a pilot project scheduled for the autumn.
- Listened to tax bodies’ feedback on telephone services, which will lead to a wider survey. HMRC is also planning to develop an online tool to help agents anticipate expected response times.
One area that will need further attention is to identify and agree some key service performance indicators that will be presented to tax bodies at their next liaison meeting. This initiative was one of the imrpovements recommended by the Commons Treasury Committee report in July 2011.
PAYE year end: Final countdown
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AccountingWEB’s Editor at large has been with the site since 1999, rising from news editor to editor in chief, global editor and head of insight. As a roving editor, he continues to investigate the profession's use of technology around the world. He devotes his spare time to technology history and an oddball collection of stringed instruments...