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P35 reminder letters sow confusion

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15th May 2012
Editor at large AccountingWEB
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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.

The issue was raised in Any Answers and the Working Together eGroup last Thursday afternoon, with more than 15 people reporting that reminders running into the hundreds had been received.

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

Meanwhile, HMRC reported this week that the service quality initiative undertaken with the professional tax bodies has been going “according to plan”, according to its latest progress report (PDF).

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.

Also see
PAYE year end: Final countdown

Replies (34)

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By rc.falconer
16th May 2012 10:53

P35 reminders

It would be helpful if you see on the HMRC website when you log in that the P35 had been received. Surely not too hard in the 21st century. 

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Replying to davidwinch:
By aiwalters
16th May 2012 11:46

you can

rc.falconer wrote:

It would be helpful if you see on the HMRC website when you log in that the P35 had been received. Surely not too hard in the 21st century. 

you can. There's a list of clients, and it says "last year filed" either YES or NO.

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Replying to Euan MacLennan:
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By PatriciaRr
16th May 2012 11:34

No Return Due

aiwalters wrote:

 There's a list of client's and it says "last year filed" either YES or NO.

The trouble is that where you have notified no P35 due the list shows as NO to last year filed with no indication that they have received a no return due report. I phoned to check having received the 29th April reminders on 15th May to be told that they cannot check so maybe I should "notify them again just to be safe"!

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By juliekpb
16th May 2012 10:55

P35 reminders

How can anyone praise any part of this.  It is not enough to accept that these are being issued tp try and stop the £400 penalty problem.  We are having to spend a great deal of time putting references on each letter so that we can then check that there are no stray  ones not on our P35 filed list.  Why can't HMRC ever get it right?

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By wyoming
16th May 2012 11:05

Issue dates!

I received a P35 reminder for a charity that I deal with. Not only had the submission already been made, but the "reminder" that I received on 14 May was dated 29 April (15 days earlier and, bizzarely, a Sunday).

Nearly all post from HMRC arrives at least a fortnight after the date shown on it, so clearly it isn't leaving their premises until well after the issue date.

This is particularly annoying with things like penalty notices where appeals have to be made within 30 days of the issue date - at least half that period has gone by the time you get it.

Come on HMRC, sort it out!

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By pauljohnston
16th May 2012 11:05

Why does it take so long to process P35s?

I am sure there are a lot of them but I find it difficult to understand why it takes so long.  Can anyone explain please.

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By wardandco
16th May 2012 11:10

Computer flag

I know they can't work out for a while whether we've filed or not but surely it just takes a flag on the computer system to say 'processed' - I remember programming this sort of thing decades ago but we just have to accept them being slow!

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By ccassociates
16th May 2012 11:19

P35

Yesterday I tried to file a P35 for a client not on my list,by the filing only service. After several failed attempts I rang the online helpdesk quoting Error 1046, (20 mins to answer by the way) I was asked for the PAYE ref which I quoted from the reminder and was told that the reference was not valid, I asked what i should do next and was told we are online helpdesk, not our problem ( in so many words)

Another 2 hours down the drain due to their failure, HMRC is not fit for purpose

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By frauke
16th May 2012 12:47

We all have to work to really tight deadlines in hope that clients don't get fined but HMRC seem incapable of doing the same and in the process they cause us extra work.

I have clients getting SA late payment penalty reminders even though I have had it confirmed a couple of weeks ago (by spending large amounts of time on the telephone) that they were issued in error as the details on the HMRC system have either been updated incorrectly or not updated at all.

 

 

 

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By Nick Graves
16th May 2012 11:21

Wyoming makes a good point

Surely if post is not being dispatched for two weeks-one month after it is dated, is this not at best misrepresentation and at worst fraud?

Bit like the first penalty notifications being for £400, really...

PAYE's only been with us for about 60 years, so it's a bit early for the whole system not to be riddled with holes. Well, according the the HMRC apologists at least.

 

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By appacc
16th May 2012 11:23

It's a shambles

Why don't our representative bodies include accountants who actually work at the coalface?

The issue of closed schemes happened last year as well. We have only just found out that it is because we filed early and HMRC assumed it was because the business had ceased.

HMRC will not acknowledge such issues so we at least know they are aware of a problem.

Can we not have a section of our agent list that shows us which jobs, P35, Sa returns etc. are still outstanding or overdue? We could then use it as a work list.

What hapens to all those letters we send to HMRC asking for an explanation but we never receive a reply. When a reply is requested, they should be obliged to give it.

 

It looks like there is no system for feeding problems back to those who are able to resolve them.

We have many PAYE annual payment schemes and have just received paying in books for 12 months of 2012-2013. They say they prefer electronic payments and then enclose 12 envelopes! What a waste of money.

 

There is no system for saying a client will not need an SA return next year. We put a note in the box but no-one ever actions it. They obviously have a problem which presumably why there was an insert with this years tax return notice. So a return gets issued and then has to be cancelled. I wonder how many penalties eventually get cancelled for this reason.

The list goes on.........

Talk about efficiency and productivity!

 

 

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Pay Academy Director
By nikicaister
16th May 2012 11:30

Reminder letters for closed schemes

As a bureau acting for over 200 clients we have been deluged with these letters .Interestingly, within all those remiders we have found a smattering for schemes that we know have been closed. How can HMRC issue a remider for a scheme that is no longer live on their system? We are now plagued by uncertainty as to whether we should file a nil return on these supposedly dead schemes...How does HMRC manage to make things so complicated?

 

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Replying to lionofludesch:
By Canary Boy
16th May 2012 17:08

How can you file

a nil return? I ask because we set up a PAYE scheme in March (I know) but the client did not operate it until after 6th April and they are being reminded to file a P35 for 2011-12.

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By Robert Hurn
16th May 2012 11:32

Filing is shown online

The agents screen for payroll has a simple yes/no showing whether last year's (2011/12) P35 has been filed.  Easy for the agent to check but difficult to understand how HMRC can claim in takes some time to know who has filed.  But they were reporting to WT, preaching to the converted.

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By Robert Hurn
16th May 2012 11:42

I agree Patricia

Closed schemes and nil returns has been a problem for many years.  Personally i welcome the chase up letters, allows me to triple check filings, but only have 40 payroll clients so not a great time loss.  HMRC claiming that are trying to reduce the number of £400 penalties issued is a bit rich, could it have something to do with the P35 battle going to the 2nd Tier Tribunal (by the way does anyone know when this case will be heard?)

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By rogtuf
16th May 2012 11:51

P35's
What total drivel. Where do they find these people who supposedly represent the profession? Making the computer only produce reminders for those returns that are outstanding would be a simple programming issue paid for by the saving in postal costs.

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By joneser
16th May 2012 12:11

PAYE repayments

"...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."

 

So how are HMRC calculating and issuing repayments to employees who overpaid PAYE, from 17th (?!) May?

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By John Price
16th May 2012 12:24

p35s rogtuf

Rogtuf,

If you are unhappy with the profession's representatives on Working Together, I suggest you volunteer. I know one of the representatives  who puts in a considerable amount of unpaid time on our behalf

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Replying to DMGbus:
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By rogtuf
18th May 2012 13:16

Representation

John Price wrote:

Rogtuf,

If you are unhappy with the profession's representatives on Working Together, I suggest you volunteer. I know one of the representatives  who puts in a considerable amount of unpaid time on our behalf

With respect sir, my firm did volunteer and we have already had our first meeting with the HMRC. I made our views about the P35 debacle abundantly clear to the HMRC representatives who were unaware of the issue. P35's are not the only culprit, I also included Income Tax returns and P11d's.

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By Nick Graves
16th May 2012 12:30

appacc

In order to cancel your subscription to SA, you have to tick the boxes 'collect unpaid tax through code' and 'collect non-PAYE' tax through tax code'. Then the computer says yes.

Again, for all the reams & reams of stuff HMRC issues covered in too many words to make any sense, they have not to my knowledge ever clarified that.

No-one actually reads the box where you try to explain stuff to them.

HTH

 

 

 

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By ralan
16th May 2012 12:56

P35 reminders!!!!

Not only did we receive reminders for P35's that had been filed we also received them for schemes that were closed in 2010/11 and earlier

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By Harry Grant FCA
16th May 2012 13:17

P35 reminders

I fail to understand why it might take several months to process P35s when they have been filed electronically.

 

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By bzalcs-c184
16th May 2012 13:33

P35 Reminders

Whilst not supporting bad practice from IR I am surprised we are complaining now on this as surely it is better to get reminders and check them out in case we missed one rather than the large fines whic consume so much of our time.

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By SueJ
16th May 2012 13:49

P35 reminders

Speaking as an employer, I have also just phoned HMRC (had my lunch break while I was waiting) to check P35 submitted on line a month ago via Sage payroll was actually received. I also asked why there is no record on the submission when I log in to our PAYE section of HMRC website. I was told that the website is for 'manual online submissions' not ' internet online submissions' (or words to that effect). So basically, the only way to keep track of (non manual) ONLINE submissions to HMRC is to keep a separate paper trail !!!! I too am wondering what century HMRC think this is. (Remind me how much does HMRC pays on IT annually?)

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By RichBatoul
17th May 2012 08:40

P35 reminders

One of the problems with the P35 reminders appears to be the indiscriminate way they have been issued, causing confusion where returns have already been filed.

However, HMRC state it is cheaper to issue blanket reminders than to only issue reminders for returns still outstanding.

Since HMRC wish to push ahead with RTI operation of PAYE does this not fit into the same category?  If HMRC require real time information from employers then should not employers expect "real time information" from HMRC? 

 

 

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By pauljohnston
17th May 2012 13:47

Canary Boy

If you use proprietary software such as Payroll Manager by Moneysoft this is possible.  I have never used HMRC's software.

Otherwise you are down to a letter (and probally an appeal against a penalty).  Having said that I believe there is a link on HMRC's website but I am not sure - hopefully another poster can give you the link.

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Replying to stepurhan:
By aiwalters
18th May 2012 11:45

use this link

pauljohnston wrote:

If you use proprietary software such as Payroll Manager by Moneysoft this is possible.  I have never used HMRC's software.

Otherwise you are down to a letter (and probally an appeal against a penalty).  Having said that I believe there is a link on HMRC's website but I am not sure - hopefully another poster can give you the link.

https://online.hmrc.gov.uk/shortforms/form/P35NilAgent?dept-name=&sub-dept-name=&location=1&origin=http://www.hmrc.gov.uk

 

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Replying to pacta:
By Canary Boy
18th May 2012 12:49

But we do use

Moneyoft. You still cannot file a P35 without any employees, unless I'm missing something. Thanks for the link - that may be the answer.

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Morph
By kevinringer
18th May 2012 13:08

Can't be dispatch delay - and where to phone?

It can't be dispatch delay because I received a letter for a P35 filed 15th March – exactly 2 months before receiving the letter. Also, there is no phone number on the letter so clearly HMRC don’t want recipients to contact HMRC.

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By Nick Graves
18th May 2012 13:56

Funny that

..how one is apparently always the first to have ever brought an issue to HMRC's attention!

I don't doubt the efforts people are putting into "Working Together". It is becoming abundantly clear though that Working Together isn't.

 

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By pauljohnston
19th May 2012 13:21

Canary Boy

If it is a Ltd company the directors are deemed to be on the payroll from the date of his/her appointment.  I suggest that you put in just one employee with no salary and this will be accepted because I have done just that.

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Replying to Mr Hobbit:
By Canary Boy
23rd May 2012 08:58

Unfortunately

it is not a Ltd Co. so that option is not open to us. Looks like the only way is to complete the structured email. Thanks for the suggestions.

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Replying to johnjenkins:
By Canary Boy
28th May 2012 14:04

Update
Completed the structured email on HMRC site and had acknowledgement back - so far so good. I wonder sometimes why these simple tasks are so well hidden!

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By Bluffer
28th May 2012 11:11

Delay in receiving reminder letters

I received three reminder letters dated 29th April 2012 on 26th May!

Not at all helpful and what a waste of money.

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