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RTI troublespots: Starters/leavers, CIS, NMW & multiple FPSs

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8th Mar 2013
Partner Rebecca Benneyworth Training Consultants
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Rebecca Benneyworth responds to some of the quirks of RTI raised by AccountingWEB members during recent weeks. Click the headings below to go to the issue you want to research.

Contents

Starters and leavers

By logic, the efiling philosophy that’s driving RTI should have signalled the end of the employee tax code forms and their like. While P45s were retained after protests from business about doing away with something employers were familiar with, the P46 form for those without P45s will not be filed under RTI. Instead, HMRC’s guidance for taking on a starter explains that you must submit details of new employees to HMRC when you make your first payment to them and include the details on your next Full Payment Submission (FPS).

To do so, you will need to collect all the traditional information from their P45 (if they have one) and enter it into your payroll system before you pay them for the first time. This information should include an indication of the employee's employment situation - statement A, B or C, which was previously included on form P46. This category should be included in the first FPS that includes them. If you haven’t retrieved this information from your new employee's P45, include statement B (this is their only job, but they may have received income from other sources). You should also only include pay and tax figures from their employment with you, not the year to date figures. Getting the employee’s basic details and data right is particularly important, as its computers will overwrite the address on their record when you include them for the first time in an FPS. HMRC has provided a starter checklist (PDF - right-click link and "save as..." to download) which is almost identical to the old form P46; this includes the mandatory data fields and statements A, B and C, and a question about student loan deductions. It is an interactive PDF which can be completed on screen and saved. But it is for your use only to collect data - do not submit it to HMRC.

When someone leaves the company, the employer will give them a P45 to summarise their tax status so they can pass on the data to a new employer; P45 is not submitted to HMRC; instead, the leaving date will be recorded on the FPS when the final payment is made, the ICAEW Tax Faculty  advises on its RTI guidance page.

CIS and RTI

Construction companies that supply or use subcontractors will already be reporting monthly deduction figures via the Construction Industry Scheme (CIS), but questions have been raised on AccountingWEB about the timing of CIS and RTI submissions and potential discrepancies in the amounts declared. In the latter case, a member worried that if the CIS deduction data arrived after the monthly RTI run, the reports might not tally with PAYE paid quarterly.

There should be no need to fret as CIS tax deducted does not go through RTI.  Tom McClelland responded: “The client should also (already) be filing a CIS300, so HMRC will already have the information it needs to add the CIS300 and FPS submissions together to arrive at total liability.” Companies will, however, need to file an EPS to claim their CIS offset. Then their payments will balance with their RTI filing, he added.

RTI and employees posted abroad

One member was concerned about the practicalities of reporting foreign tax offset against PAYE and how this will be reported at the year-end under RTI - “or is this back to paper amendments?” HMRC has recognised  that employers may encounter problems where earnings are delivered by an overseas employer, and has included ad hoc payments made outside of the regular payroll and notional payments are included in HMRC’s statement of Situations where employers will not have to report PAYE information ‘on or before’  the time they pay their employee. In its guidance for employers operating RTI for expat employees, HMRC said it would apply “common sense” in allowing some employers to claim a reasonable excuse for late RTI filings or PAYE payments on behalf of expats. “HMRC is not expecting employers to materially change the operation of their current UK or overseas payrolls for making payments to employees where these payroll practices are reasonable and widely accepted,” the department added. Where there is late reporting for expats, HMRC expects it to take place no later than the next regular monthly payroll date, and that the relevant payment would normally be made to HMRC within the normal PAYE deadlines for that month. HMRC will be on the look out for any efforts to use this arrangement for avoidance or manipulation and added that it would also want to see any employment income paid in respect of employment-related securities such as the exercise of share options to be reported.

Splitting full payment submissions (FPS)

There have been several queries about doing separate payroll runs, for example to separate directors from “shop floor” staff, or to handle weekly and monthly payrolls in parallel.

Yes, you can run two payrolls and submit two FPSs in one month, commented Euan McLennan, and 4-5 might be needed for weekly staff.

You are free to submit several FPSs per month or cycle, reporting separate employees. You will just file each bit of the payroll on or before at the appropriate time. Make sure that all of the references are correct on the software – same employer reference and same accounts office reference.

However Euan was concerned that his existing approach of compiling weekly summaries and payslips and then amalgamating them when the monthly payroll is run might not work under RTI. The solution adopted by his software supplier Moneysoft will be to generate 52 FPSs a year, each showing the year-to-date and current period pay for the weekly staff and the YTD figures for monthly staff. Staff marked as monthly will not be treated as leavers if there are no current pay details shown in the weekly FPSs.  And any staff not paid under their normal pay frequency will be marked as being on an irregular pay pattern on that FPS to stop HMRC treating them as having left. 

Number of hours worked

Many people have been troubled by this new field required in RTI submissions. “What happens if someone is employed on an as and when basis and do not have normal hours as such?” asked JohnCharlesworth. The first point to emphasise is that the RTI hours worked figure will not be used for minimum wage enforcement - this data is for benefit entitlement only.

Just select the band that most closely represents the hours a person is normally expected to work. Those not expected to work a set number of hours would fall into band D “Other”. Neiltonks hit the nail on the head when he commented: “You don't have to continually re-evaluate this field every period. You only need to worry about it if the number of hours a person is normally required to work changes (and then only if the change pushes the person into a different band). Don't lose sleep over it, it's not that important.”

This issue also cropped up in the RTI troublespots article on low-paid directors, which included a long sequence of comments about whether directors were subject to the national minimum wage. To recap, directors without a contract of employment and paid a fee for being office holders are not subject to NMW, nor does this fee need to be reported via PAYE RTI.

HMRC’s view is that number of hours for many directors will be 30+ on the FPS, but if you know that a director does very few hours you should report accordingly. However, if a spouse of a director is an employee then you should be paying NMW for hours worked otherwise the company is exposed to penalties.

Concessions for daily paid staff

HMRC released a number of  “easements” to the on/before filing rule at the end of 2012. One of the key beneficiaries of a relaxation in the rules relates to daily paid staff, where all the following conditions apply:

  • staff are paid daily for work done on that day, and
  • they are paid by cash or cheque (not electronically), and
  • payment is made at a time (11:30 p.m. for bar staff?) or place (at the field gate for crop pickers?) where it would be impractical to make an RTI submission on or before the payment, and
  • the employer cannot know how much the payment will be in advance.

In these circumstances, the RTI submission can be made up to seven days later. This concession still falls short of the ICAEW Tax Faculty’s campaign to standardise on monthly reporting, but every little helps. There are also relaxations for ex-pat staff (as indicated above) and for ad hoc payments made out of the normal payroll cycle.

The latest ‘on or before’ guidance  includes a discussion of managing daily payments to the likes of bar or catering staff where it is impractical to report on or before (thanks to Cloudcounter for the link and to Aburt01 for the link to the Exceptions to reporting section of the PAYE ‘on or before’ paying an employee guidance page.

Late filing and inaccuracy penalties

As Malcolm Greenbaum reminded us, draft legislation was issued on 11 December confirming that filing penalties for RTI will start from the 2014/15 tax year. But inaccuracy penalties will operate in the same way as for all other taxes (careless, deliberate errors etc) and will start from 6 April this year.

Late payment penalties from 2014/15 will not be cumulatively assessed as they are now. For this period the first late payment will not be a default. The next three defaults in the year would have a penalty of 1% each, the following three would have a penalty of 2% each, then 3% for the following three, then 4% for the next two. This means HMRC can assess penalties each month and will not have to wait until the end of the tax year - it also means smaller penalties going forward. The legislation to make this change will be in Finance Bill 2013, but HMRC have indicated to me that the old rules will continue to apply throughout 2013/14.

Rebecca Benneyworth is lecturing throughout March on ‘RTI and other PAYE issues’ as part of the Tolley CPD Seminars programme. Look out for more RTI troublespot articles on issues raised at her talks and on AccountingWEB’s Any Answers page.

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Replies (34)

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By Malet
11th Mar 2013 11:57

Directors

"To recap, directors without a contract of employment and paid a fee for being office holders are not subject to NMW, nor does this fee need to be reported via PAYE RTI"

So directors on minimum salary do not need to be reported through RTI if there is no contract in place?

The puzzle thickens... 

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By KH
11th Mar 2013 12:02

Have I understood this correctly???

"This issue ... about whether directors were subject to the national minimum wage. To recap, directors without a contract of employment and paid a fee for being office holders are not subject to NMW, nor does this fee need to be reported via PAYE RTI."

Have I understood this correctly, that unless a director has a contract of employment there is NO need for the director's fee to be reported via PAYE RTI? ... If so, this means that most directors of single member/director LtdCo will be outside the scope of RTI .... because, sic., the director's wages are not "wages", but "fees" ??????

I really hope this is the case, but fear it is not.

HELP!!!!!!!!

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Replying to Michael C Feltham:
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By vstrad
11th Mar 2013 12:38

No, I don't think you have ...

If a director (a non-exec, say) does little more than turn up for quarterly board meetings then (s)he is likely to be remunerated by a fee rather than a salary. If, however, he is a director of what you describe as a "single member/director Ltd Co" then he will be working full time (or at least a significant number of hours per week on a regular basis) and his remuneration could hardly be described as a fee. The distinction between a wage or salary and a fee is about the regularity of the work and payment for that work, not whether or not there is a contract of employment. 

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By Jon Darlington
11th Mar 2013 12:25

NI

Interesting point new to me too, but most directors' fees will be above the LEL, possibly just to get their NI years in without paying anything (how can I be so cynical, or the system be so stupid?) and will have to be included under PAYE/RTI anyway. 

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By jline199
11th Mar 2013 12:28

Does that mean?

If Directors without a contract of employment are excluded from RTI, how do HMRC get to know how much they have earned?

At present, of course, the figures for both employees and such directors get reported in the PAYE end-of-year return, but under the RTI regime?

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By Ian Lawrence
11th Mar 2013 12:36

I would appreciate clarity on this point too.  Have I just spent 2 months gearing up for putting 72 one-man consultant clients onto monthly payroll needlessly? A part of me does hope this is true !

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7om
By Tom 7000
11th Mar 2013 12:37

Low paid directors

nor does this fee need to be reported via PAYE RTI." 

 

I dont believe this....show me the rules that back this up I think this is wholly wrong...it will leave a million +  directors a year with No RTI record, No Ni payments No P60 etc

 

nope....wrong

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By lawrencewebster
11th Mar 2013 12:45

DIrectors and RTI

The key point as explained in the earlier article on low paid directors is, if they are paid above the Lower Earnings Limit (LEL), then an RTI submission is required, irrespective of the number of hours worked.

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By Sujeev
11th Mar 2013 12:48

Director’s fees

My understanding is that directors fees are subject to income tax and NIC (no NIC if they from abroad and have A1 certificate or equivalent), if the fees are subject to income tax/NIC  then I believe we have to submit FPS under RTI for directors fees.

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By jline199
11th Mar 2013 13:03

"The key point as explained

"The key point as explained in the earlier article on low paid directors is, if they are paid above the Lower Earnings Limit (LEL), then an RTI submission is required, irrespective of the number of hours worked."

OK, but for Directors there is an annual pay period. I have clients where the Director pays no NI for the first few months of the tax year, and then it starts to bite.

So no RTI at the beginning of the tax year, then RTI kicks in. But how do HMRC get to know about the earnings in the first part of the tax year?

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Replying to SteveHa:
Euan's picture
By Euan MacLennan
11th Mar 2013 14:38

FPS must be filed before every payment

jline199 wrote:

"The key point as explained in the earlier article on low paid directors is, if they are paid above the Lower Earnings Limit (LEL), then an RTI submission is required, irrespective of the number of hours worked."

OK, but for Directors there is an annual pay period. I have clients where the Director pays no NI for the first few months of the tax year, and then it starts to bite.

So no RTI at the beginning of the tax year, then RTI kicks in. But how do HMRC get to know about the earnings in the first part of the tax year?

If you have a PAYE scheme and make any payments to any employees, you must file a FPS on or before the payment and the FPS must include all the payments, whether above or below the LEL.  The significance of the LEL is that if no employee is paid over the LEL (and everyone has sufficient tax-free allowances available), you do not need a PAYE scheme at all and if you do not have a PAYE scheme, RTI cannot apply.  If you pay no-one above the LEL, but still have a PAYE scheme in place, you must still file an FPS before every payment.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
11th Mar 2013 13:24

Missing link

Some of the commentary about non-reporting of directors fees came from Rebecca's previous RTI troublespots article on low-paid directors, but I neglected to include a link when preparing this article for publication.

I have rectified that. During the discussions, Rebecca clarified that for some directors paid below the LEL, no reporting requirement exists. She explained further: "There was an agreement between IOD, HMRC, and some of the accounting and tax bodies when minimum wage came in that unless a working director chose to make himselfnan employee he was not for these purposes, and was paid as an office holder "even if working full time in the business". It further confirmed that in that case (the full-time working director) unless he specifically issued himself with a contract of employment  - which is an open choice for him - then minimum wage does not apply."

That discussion was in the context of the minimum wage. I will see if I can reach her on her on-going RTI lecture tour to confirm this point further - but suspect that switching all of your clients to this approach may put you and them at much higher risk of further investigation (but that's my own non-legal view).

PS - Again, please forgive someone not a qualified tax adviser from commenting, but wouldn't directors who are paid a combination of fees below LEL and dividends report their income and earnings via self assessment?

 

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By mrcreosote
11th Mar 2013 13:39

directors families and tax credits

My understanding of the Minimum Wage legislation was that a director's family are not subject to this if they work for the family company and live in the family home.  Re the above comment on directors' wives, is this not true?

Also, there was a move at one time for tax credits to make a distinction between office holders and employees where directors are concerned, the implication being that office holders were not entitled to tax credits as they were not in employment.  If that was true, then surely office holders are not employees and not subject to RTI?

 

 

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By DJMMHL
11th Mar 2013 14:00

Submitting FPS in advance

As a payroll bureau we have several payrolls which we do 3 monthly in advance for example in April we would process months 1,2 and 3 (April, May and June).  Can we submit the FPS for the three months all at the same time i.e. in April?  The payroll dates for each month would be the last working day of the month.  Is there an indication of how far in advance the FPS can be submitted?

We also have a client who has one employee who is paid the same net amount every Friday in cash.  We currently process the payroll at the end of the month producing either 4/5 payslips for the whole month.   If we changed the process date to early in the month i.e. before the first friday could we then also process the other 3/4 weeks at the same time with the pay dates being the subsequent fridays in the month or will we have to submit the FPS each week?

I have contacted HMRC to ask how far in advance we are able submit the FPS and there was noone who could give me the answer but perhaps you can.   

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Euan's picture
By Euan MacLennan
11th Mar 2013 14:27

FPS in advance

Yes - you can file FPSs in advance - up to 52 weekly ones in advance if you do it in the first week of April.  The risk of doing it too far in advance is that if anything changes, you will have to file amended FPSs to correct every single one of the original FPSs filed in advance.

This should not be a problem with 3 months in a quarter or 4/5 weeks in a month.

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By P2
11th Mar 2013 15:18

Risk avoidance...

The primary risk in respect of failure to operate PAYE/NIC on directors remuneration lies with the engaging company whom HMRC will expect to settle any arising liabilities to PAYE and NICs (with interest and penalties).

HMRC is increasingly targetting remuneration packages and those arrangements designed to circumvent PAYE/NIC (e.g. dividends without supporting process and paperwork) and therefore the position of director/shareholders needs to be managed "proactively".  Operating PAYE gives a further opportunity to achieve this and state clearly what payments to director/shareholders are intended to represent - wages, salary or dividends.

(Furthermore the opportunity for Directors to have the Class 1 NICs paid for them by the Government when they report a low wage is a bit of a no-brainer).  If HMRC aren't told what is happening the NICs entitlement goes unrecorded.

 

 

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By Andrew1946
11th Mar 2013 16:03

RTI Director Salary one payment

Like so many of other respondants I am the only paid Director of a  SME Ltd Co, and am remunerated by way of Salary/ Dividend.  In the normal course of the year I take monthly drawing the debit entry going to my Drawings/Current A/c, depending upon the credit balance of this A/c, and of course the profitability of the company,requisite Dividends are paid monthly/quarterly. In an attempt to keep administration and reporting to a minimum, this year (2012/13) Monthly salary, below the LEL and the secondary NI threshold has has been paid directly and identified as payroll costs to my personal Bank A/c  the totals of which will be reported through the normal end of year payroll submissions to HMRC. 

In 2013/14, I propose to carry out the same drawings proceedure but instead of the payroll payment each month, just make my normal monthly drawings say £600 more, and making a  salary payment in March 2014, having previouly notifying HMRC that this Director is on an annual payment schedule, thus only needing to do maybe one or two RTI submissions.

Firstly is my understanding/application of the rules correct or is there some massive hole I'm falling into, secondly, by marginally paying a higher Dividend say between £7000-8000, to compensate for no or a lower salary mean a higher Corp Tax bill         

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By kouloura
11th Mar 2013 17:07

CIS and RTI any answers please?

 

I am a little confused as to what happens when you have CIS suffered on a payroll that is in excess of the actual PAYE due, I have attended an online course this morning with our software provider who has skirted around this very vaguely - but informed me that if our client has a refund due for two months and then on the third month has a payment to make then any CIS already suffered cannot be offset and the CIS cannot be reclaimed until the end of the tax year - does anyone else have any further information as I ahve trawled HMRC website this afternoon to no avail (HMRC mention deducting it from PAYE but, not what happens if there is then a credit on the account)and I have a number of clients that this may affect.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
11th Mar 2013 20:11

A few replies

I'll start with the last question from kouloura. When PAYE and NIC due as reported by the FPS's in the month is to be reduced by a CIS offset by a company then an EPS is filed between 6th and 19th of the month to indicate how much CIS is to be offset. However, this cannot generate a refund, and the process (such as it is) for recovering CIS due for repayment will not alter - it will be claimed at the end of the year. One issue I'm not quite clear on is how as there won't be a P35. I'm wondering if the EPS will generate a carry forward amount on a cumulative basis.

You're right about month 3 in your example, as the only provision under RTI is to allow CIS suffered in a month to be offset against PAYE and NIC due for the month. I'll check back to the CIS legislation later to see whether this is technically correct.

Next point - the minimum wage point from mrcreosote. If the company is the employer, then a comapny does not have family members (as it is not a natural person) so the exemption from minimum wage for family members does not apply. It can only apply where the employer is an individual.

Now to the confusion over directors. John quoted me on the issue of minimum wage, and without the link the quote is misleading. John has now put the link in. So minimum wage not a problem (and wouldn't be in any event as this data won't be used for that in any event). As far as reporting etc is concerned, the rules are the same for directors as they are for anyone else. If there is an FPS to report for one employee then everyone else who is paid must be reported.

Turning to the annual scheme and reporting at the year end. The problem with drawing the money through the year and reporting annual ampount at the end of the year is that it does not comply with the on or before rule. If you know that your monthly drawing includes salary then you need to report it on a monthly basis as drawn. You could run a monthly payroll, or run a few months in advance (for example months 1,2,3 in month 1). While there are no penalties at the moment, the year's grace will soon slip by!

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By John Snowden
12th Mar 2013 07:34

Drawings before (annual) payroll

It seems to me that, were the director(s) properly briefed, understood that - and also documented that - any payments made other than the credit of the actual net pay per payroll were LOANS, then the annual approach might work fine, would it not?

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By Ian McTernan CTA
12th Mar 2013 09:34

Another fine mess

This is sounding more and more like a Laurel and Hardy show all the time.

Who exactly benefits from this new system?  Certainly not hard pressed employers who will now have to spend even more time and resources dealing with a system that the Revenue will not be able to process or handle, leading to many fines being issued and contested.

Great way to put off potential new employers- show them a couple RTI discussions, they will decide not to bother expanding if it means having to cope with all this rubbish.

Here's what to do with your above LEL but not paying NIC directors (£7200 or so).  When you run the end of year stuff on the Revenue's free end of year software, run April's RTI submission for that company too, include a payment of £7200 in April, and try and tell the system that is the only payment for the year.

Use HMRC's basic PAYE tools- I'm not even sure that you can use this for multiple clients as usually I use the filing only option on my agent's panel.  Maybe someone can confirm how or whether this is possible?

And this:The RTI-ready version of Basic PAYE Tools for 2013-14 is not yet available.  Less than a month to go for everyone to move across to the new system and no way for the average employer to try it out and take a look before it goes live.

​HMRC's head in clouds department dreamed this up, envisioning multinationals with huge payroll departments and dedicated hotlines for them to talk to technical experts to resolve any issues- meanwhile down at the coal face ordinary joe public and one man bands will have little to no chance come April of getting it right.

Maybe someone ought to be running a proper ad campaign and supplying employers with a hell of a lot more printed information- as sending a one page notice with 'see our website for further details' will have been missed by the vast majority who actually have real live businesses to run and don't have the time to spend hours searching around and/or reading up on some new reporting system that benefits them not at all.

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By Marmite
12th Mar 2013 14:45

If no FPS in a month do I still need to submit an EPS?

The course I attended yesterday seem to suggest that if no FPS was submitted in a month then an EPS submission was still required to confirm zero payments due to HMRC.

If this is the case would this not scupper the idea of running - say a quarterly directors payroll in advance (as suggested by Rebecca)? Therefore no real saving in work as we may as well submit the FPS each month. 

Alternatively would it be the case that if we informed HMRC that we are operating a quarterly payroll for the sole director would they accept no EPS for 2 months each qtr?

Any ideas?

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By KH
12th Mar 2013 16:01

Only one solution for all those directors drawing just above the LEL but below the PAYE/NIC threshold ... pay them monthly, same amount each month (£640 ???), get signed Minutes from each company agreeing this wage and payment dates, and then do a monthly RTI return for each director each month ... it's that, or submitting monthly zero-payment returns, or falling foul of some unsuspected (nay, purposely hidden) small print in this mad hotchpotch of a crazily bungled idea ... and not forgetting to charge all those little companies for the time and expertise involved in doing this ... say extra £50 to £1k pa depending on the company ..... and even at that level of fees it's not exactly going to keep them thar hungry howling wolves from the door.

Rats!

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By sutton
12th Mar 2013 16:30

CIS suffered Month 2 Employee not paid until Month 3 ?

I have a couple of questions if anyone knows the answers please I would be grateful:

1) If CIS suffered Month 2 but no PAYE due and no employees paid does the EPS still have to be filed M2? Or EPS M1 showing inactivity for 2 months, Then FPS Month 3 (to pay employee) along with EPS giving CIS suffered figures for the quarter?

Which is the correct procedure?

2) Also will HMRC still accept the quarterly payments as not being late or will there be a tick box somewhere on the forms to notify them that the PAYE is being paid quarterly rather than monthly?

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Replying to david wilks:
Euan's picture
By Euan MacLennan
14th Mar 2013 09:54

Duplicate question

sutton wrote:

I have a couple of questions if anyone knows the answers please I would be grateful:

1) If CIS suffered Month 2 but no PAYE due and no employees paid does the EPS still have to be filed M2? Or EPS M1 showing inactivity for 2 months, Then FPS Month 3 (to pay employee) along with EPS giving CIS suffered figures for the quarter?

Which is the correct procedure?

2) Also will HMRC still accept the quarterly payments as not being late or will there be a tick box somewhere on the forms to notify them that the PAYE is being paid quarterly rather than monthly?

Didn't you like my answer to the same question you posted in Any Answers?

[EDIT]  Sorry!  I now see that you posted this question first and then, the same question on Any Answers.

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Replying to ScribbleD:
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By sutton
18th Mar 2013 09:20

Duplicate question - Whoops!

Sorry Euan I am new to participating and when I entered my Q here I realised it should have gone on 'Any Answers' hence the duplication. Thank you for your help.

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By Ian McTernan CTA
13th Mar 2013 10:17

One payment....

I'm not a payroll bureau.  I'm not interested in running a monthly payroll for each of my sole director companies- and neither are they.  In fact up to now I have just used the file only P35 system on HMRC's site.

They will receive one payment of around £7200 in April by way of credit to their loan accounts (the revenue's 'earliest of' favourites)  followed by nothing for the rest of the year.

It's not my fault the Revenue's system can't cope with this simple life.

According to this new system, am I right in thinking they now want me to 1. go out and spend money on a payroll system and 2. file 11 NIL returns for each company.

Where is the tick box and HMRC software saying 'director only, one payment' and why the hell didn't the working group not get this sorted out?

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Replying to Agutter Accounts:
Euan's picture
By Euan MacLennan
14th Mar 2013 09:52

Annual scheme

Ian McTernan CTA wrote:

I'm not a payroll bureau.  I'm not interested in running a monthly payroll for each of my sole director companies- and neither are they.  In fact up to now I have just used the file only P35 system on HMRC's site.

They will receive one payment of around £7200 in April by way of credit to their loan accounts (the revenue's 'earliest of' favourites)  followed by nothing for the rest of the year.

It's not my fault the Revenue's system can't cope with this simple life.

According to this new system, am I right in thinking they now want me to 1. go out and spend money on a payroll system and 2. file 11 NIL returns for each company.

Where is the tick box and HMRC software saying 'director only, one payment' and why the hell didn't the working group not get this sorted out?

The Revenue can cope with your simple life.  You are wrong in thinking that you must file 11 nil EPS returns.  Ask for an Annual Scheme.

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By Ian McTernan CTA
14th Mar 2013 11:54

Ahhhh....

I looked at your reference (for which many thanks) and see the glaring problem:

contact HMRC's Payment enquiry helpline0845 366 7816

Apparently they want me to phone a number and be on hold FOREVER in the vain hope that the person who finally answers can actually deal with the numerous companies that I act for and successfully turn all those schemes into annual schemes.  Having had experience of trying to get them to set up annual schemes in the past I don't hold out much hope.

I'm not even sure how I am supposed to run all those annual schemes using HMRC's basic PAYE tools, or what free software I should be grabbing to comply with HMRC's latest paperchase.  I have no interest in buying separate payroll software in order to report what I have previously been able to do once a year.  Nor do I want to waste hours and hours setting up these employers on a new system just so I can report a figure to HMRC.

Why isn't there a checkbox on their system, that we can check and turn a scheme into an annual scheme (agents only)?  It's not rocket science, and would save all this running around.

If I'm beginning to sound like a grumpy old man it's because I feel like one at the moment!

If anyone has any thoughts feel free to PM with suggestions, many thanks.

Thanks (1)
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By cmiskin
17th Mar 2013 13:41

Starter Information/P46 and Permitted Work

There is a fundamental flaw in the P46 which has continued with the Starter Form. It does not allow for the situation where someone is claiming taxable Employment & Support Allowance/Incapacity Benefit and is working  - as they can often be entitled to under the Permitted Work rules. Employee needs a code for employment which restricts the personal allowance for  the amount of benefit but Box C and BR code would be better than the current situation where they automatically have a P800 underpayment once the year is reconciled if Benefit plus Employment income is more than PA.

Similar considerations apply where taxpayer is in receipt of ESA/IB and starts to receive an occupational pension.

Any chance of persuading HMRC to put a system in place that deals with these not unusual situations?

  

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Euan's picture
By Euan MacLennan
17th Mar 2013 17:17

It is called RTI

The P46 options of emergency code/BT/0T have always been a bit crude.  Under the old system, submission of the P46 often prompted the issue of a 'proper' PAYE code.  In future, under RTI, the issue of a new code should be even quicker.

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By angusnicolson
19th Mar 2013 20:11

New client, new registration - new problem?

A new limited company payroll client came in today.  She plans to employ her sole employee on 8 April and pay her on the next Friday, but isn't currently registered for PAYE.

She doesn't want me to register her until early April, as her plans might change.

Without a PAYE reference how can she pay her employee at such short notice?

(I know that the recent delay in RTI moves this back, but imagine the same happens in early November).

The rest of our clients are ready to go, and I like to think I just about understand RTI, but ...

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Euan's picture
By Euan MacLennan
20th Mar 2013 12:26

New client - no problem

Tell her she has a choice:

you register her for PAYE now, so that the references come through in time to make the RTI submission due by Friday, 12th April, and if she changes her mind in the next 2 weeks, you will write to HMRC to cancel the scheme, oryou wait until she has taken on the employee and then, apply for registration, in which case she has no chance of complying with the requirement to file an FPS at the end of the week, oryou wait until she has taken on the employee, but to be paid at the end of the month with advances each week, and then apply for PAYE registration, in which case she should be able to comply with the latest RTI concession.  I assume that this is what you mean by "the recent delay in RTI".  However, this will only work for 6 months when you will have to switch to a weekly payroll and FPS if she is to be paid weekly.

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Replying to gwilkinson:
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By angusnicolson
20th Mar 2013 13:12

New businesses - still a problem

Thanks Euan, and the work around is clear for this particular employer, but it doesn't solve the fundamental problem of needing to get a PAYE reference before running a payroll and the fact that this can cause delays in compliance.

In the real world - which we inhabit - a guy walks in the door to ask you to form a company on Monday so he can start working for an agency on Tuesday; invoice on them Friday; get the money next Wednesday and pay himself on the following Friday.  Before you say it is unrealistic, we did 30 of these for one agency last year, and are promised another 50 this year.

The work-arounds aren't legal if the director really needs the money and the PAYE reference hasn't arrived, yet HMRC don't seem to have thought through the practicalities.

Are we expected to bend the rules to ensure 'compliance', or just tell the client he can't pay himself because HMRC say he can't?

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