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PAYE online adjustments

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6th May 2010
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Fiona Marshall offers some timely tips for those submitting PAYE returns online this year.

The world of finance has always been riddled with complications and pitfalls, and one area which has given many a headache over the years is PAYE submissions (Pay As You Earn).

HM Revenue and Customs has recently announced that as of 19 May the majority of PAYE returns will have to be submitted online. This new rule applies to firms with a staff of five or more employees.

With this news comes the concern for many about the new problems this process may reveal. As with all change, there is a risk of complication and confusion.

The first issue is making sure your business is registered for online submissions. In order to file your returns online, you must first register with the HMRC 'PAYE Online for Employers' service at www.hmrc.gov.uk/paye. However, it may take up to a week for your registration to be completed and for you to receive your activation PIN. Once this has been sent to you however, you are then ready to submit your P35.

Correcting errors
Once you have submitted your P35 online, what should you do in the event of discovering an error? It is important to make sure you follow the correct guidelines in this situation, as there is a fairly strict process that has to be followed in order to rectify errors.

Firstly, you need to produce a paper version of the P35, complete with the correct figures and details, and then ensure it is signed by an individual with the correct authorisation. You must then write to the appropriate tax office with a full explanation of how the error occurred and a statement that the amended P35 is correct and should replace the one filed online.

Penalties
All the above should be followed swiftly, as another reason to give your PAYE returns considerable attention is the issue of the new penalties for late payments. The new rules state that if eligible firms do not file their Employer Annual Returns electronically by 19 May they will be liable for a substantial fine of up to £3000. Therefore, it is essential to access expert advice and guidance in order to make sure you submit your returns legitimately, correctly and quickly.

As employers get used to it, hopefully the PAYE online return system will become smoother for all as it is planned to be a much quicker and more straightforward way of completing end of year returns. HMRC is rolling out these new regulations with the claim that the online process will significantly reduce errors and to aid businesses in coping with the change, it is offering its own downloadable software to provide support.

If you are still unsure of how to go about this process, your accountant can register with the online service on your behalf, as well as guide you through the system to ensure the risk of error is as low as possible, leaving you with fewer reasons to worry.
 
Fiona Marshall is payroll manager in the Business Services Division at TWP Accounting.

 

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Replies (9)

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By gg
07th May 2010 15:36

'This new rule applies to firms with a staff of five or more emp

No it doesn't, it applies to ALL employers, regardless of size, with only 4 exceptions:

http://www.hmrc.gov.uk/paye/payroll/year-end/annual-return.htm#3

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By Malcolm Veall
10th May 2010 11:12

Monthly Returns

A related question.  At some stage last year there was publicity that employers who were late with their monthly/quarterly returns, (ie paying over the PAYE to HMRC), would be liable to penalties.  Previously this has only applied to y/e returns, with the only adverse effect, (apart from potential black marks on the HMRC risk analysis), of late paying over being interest if paid after 19th April and collection action from Recovery offices.

Was this quietly dropped or is it a bombshell HMRC are keeping in the cupboard to get out after 19th May for Mth 1 2010-11 payments?

 

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By Steven Tucker
10th May 2010 11:50

Zero penalty for employers with 1-5 employees

There has been some confusion over whether a very small business needs to file electronically, which seems to stem from a misleading article in the Telegraph last month.

If none of the (rare) exceptions apply, an employer with 1-5 employees (in total throughout the year) is required by law to file their return electronically for 2009/10, however the penalty for filing to do so is zero.  This is detailed in the Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2009.

 

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By Mister E
10th May 2010 11:53

P35 amendments can be made online using the HMRC service.  I have found this much quicker to use and I am never convinced that written amendments are dealt with very quickly.  You just show the amendments as a difference on the P14's you need to amend, so if a figure is reduced you show it as a minus figure in the appropriate box on the P14/P35.

 

With regards to the penalty question above are you referring to these http://www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm

They came into force 6/4/2010 so apply from 19/5/10 payments.  Although I have no idea how HMRC will police this as they do not know what employers should be paying each month.

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By tltodman
10th May 2010 18:54

Prior year P35 amendments

You can also file prior year amendments on line in the same way too (ie difference between original figs and revised figs).  I'm in the process of doing a revised P14 and P35 for 2007/08 for a client.  You just have to select the Change Tax Year option from the menu on the left and away you go.  (remembering to change the year back afterwards...)

 

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By Huw Williams
10th May 2010 22:12

P35 amendments

Whilst you can make amendments online if you filed online with the HMRC software, I am not sure that you can do it if you use payroll software.  Our software does not allow for amendments and we could not file an amendment online direct to the HMRC website (I think because you can only file an amendment after you have filed an original return using the same system) so had to use pen and paper.

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By tltodman
10th May 2010 23:23

Online amendments

According to the tax office you can file revisions using HMRC software however you originally filed. In my 07/08 situation I filed using Sage payroll - with Sage's inadequacies and lack of historic information it would be a case of reinstalling that year software and a back up and amending that way - and I'm not convinced that either a good use of my time or whether it would work with later versions on PC.  The tax office suggested that online was the only way to file revisions until I pointed that online filing wasn't mandatory then so why should revisions be - and they conceded paper versions were acceptable but I'd need to wait for orderline to send out 07/08 versions of the forms before submitting.  HMRC software solution seems simplest all round.

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By Mister E
11th May 2010 15:06

Amending online

I have amended a few P35's online even where I have not used the HMRC online service to file the original P35.

You can log into the HMRC service, use the "filing only" option to create a client (if you have used say Sage) and then set up the employees you need to amend, then select amend P14 option.

Very easy and acceptable by HMRC.

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By AdrianHobbs
13th May 2010 07:05

Requirement to e-file

You state: "HM Revenue and Customs has recently announced that as of 19 May the majority of PAYE returns will have to be submitted online. This new rule applies to firms with a staff of five or more employees. "

In fact all employers, with very few exceptions, regardless of size, including employer with less than 5 employees in a PAYE scheme, are required to e-file their 2009/10 return this year and in subsequent years. Please see www.hmrc.gov.uk/paye/payroll/year-end/annual-return.htm which details the only employers who are now allowed to submit a paper return.

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