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Ken Voller

From: Ken VollerSent: 20 February 2013 10:35To: Ken VollerSubject: RE: Employer's Declarations - Real Time Information (RTI) - Part 4

This is likely to be my final RTI update before the new regime starts for all employers in April but, even so, I will continue to monitor how the new rules will affect employers and payroll. From HMRCs perspective, the pilot that has been operating since last June appears to have been very successful and a What’s New announcement for RTI is in place to explain HMRC’s views and how it expects RTI to work. A link from that site takes you through to a whole range of RTI information and advice for employers, including:-

‘On or Before’ reporting requirements Dealing with starters/leavers The removal of the P46 process and the introduction of a ‘New Starter’ form which, interestingly, is

remarkably similar to the form P46! What payments count as wages/salaries for triggering RTI How to effectively deal with pay periods of less than a month Penalties for getting it wrong!

In the main, the actual reporting under RTI should not be so bad once we are all dealing with this on a regular basis. However, I fully expect some teething problems as we move into the new regime. HMRC appears to recognise this too by ensuring that penalties, although identified, will not actually be charged for at least another tax year. This should, in theory, enable us all to get used to the new processes before incurring any financial burdens. The main difference for payroll providers, including myself, has been changes to the work required before the RTI reporting is needed. At a minimum, this has meant additional steps for authorisation of the RTI reports so that a typical monthly payrun will now have the following steps:-

1. Employer provides ‘raw’ data for the monthly payroll 2. I provide employer with processed data, including payslips and details of PAYE Tax/NIC to be paid to HMRC 3. I ask employer to confirm when payments will be made to employees 4. Employer confirms agreement to processed data, acceptance of PAYE Tax/NIC liabilities, and advises me of

the date that employees are to be paid 5. I submit the RTI report to HMRC – on or before the payment date (This is a very important step for RTI

purposes) 6. Employer makes payments to employees 7. Employer deals with payment of the PAYE Tax/NIC to HMRC (This is a vitally important step as most

penalties hinge on the late payment to HMRC) Despite HMRCs statements that RTI is being introduced to help employers, this is not actually going to be the case. Employers will continue to be unpaid collectors of taxes for HMRC but there will now be increased opportunities for getting things wrong and suffering consequential penalties. I am going to try my best to help employers avoid falling into the RTI traps but most of these can be easily navigated by the completion of the payroll process at the earliest appropriate times. Ie, don’t leave things until the last minute as that is almost certainly going to mean tears before bedtime! In addition, although the ‘end of year’ processes will be limited in future years, employees will still need forms P60 at the end of each tax year. Other traditional year end processes will now be completed through the year, so spreading out the work required. At the moment, I am not convinced that this is saving anything for employers but, time will tell.

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As before, if you have any specific queries regarding RTI, or payroll generally, please do not hesitate to contact me. Kind regards Ken K Voller FFTA ATT http://www.tax-business.co.uk Tax Business email: ken@tax-business.co.uk Salt Mill Barn Tel: 0845 130 6380 Old Salisbury Lane Mob: 07914 762 375 ROMSEY Fax: 0845 130 6381 SO51 0GD Skype: kenvoller

Tax Business is the trading name of Tax Business Ltd, a Limited Company – Registration number 07496432. The Registered Office is indicated above. This email and its attachments may be confidential and are intended solely for the use of the individual to whom it is addressed. If you are not the intended recipient of this email and its attachments, you must take no action based upon them, nor must you copy or show them to anyone. Please contact the sender if you believe that you have received this email in error. EXTRACT OF EMAIL DATED 1 OCTOBER 2012 Since the update ‘Part 2’ in June (see below), I have been taking part in a Pilot scheme for RTI with a few employer victims volunteers! The pilot seems to have been working well and HMRC has recently advised that it is still on track to roll out RTI for virtually all employers from April 2013, ie, the start of the new tax year, 2013/14. This seems to be good timing in that the current year can be finished off in the usual way (forms P35/P14 etc) and next year will be fully in RTI. One downside of the timing may be that it coincides with HMRC’s annual systems updates which tends to mean that ‘live’ reports get buffered for up to a week before processing. If this is likely to cause issues, we will deal with those at that time. As mentioned previously, employers not already set up for RTI will be invited to join nearer the time. Shortly, I will also be validating the data that I hold to ensure that RTI does not become an issue. For example, making sure that the basic data held complies with the RTI rules, ie, name, address, date of birth, national insurance number, etc. EXTRACT OF EMAIL DATED 11 JUNE 2012 Further to my email of 25 May, I have an update concerning the implications of RTI to you, as employers. Three additional reporting requirements will be needed under RTI:-

1. Hours worked. This will be banded on a weekly basis and, for full-time employees, reflects contractual hours rather than specific hours. The bands are: a. Up to 15.99 hours b. 16 - 29.99 hours c. 30 hours or more d. Other – the expectation is that this is mainly for individuals in receipt of pensions rather than wages/salaries

2. Passport number – only if you reviewed the employee's passport, as part of checking that they have the right to work in the UK, you must include their passport number as part of the basic employee data.

3. Additional Statutory Paternity Pay (ASPP) – if ASPP is to be paid, then the father’s partners full name and National Insurance number is to be reported under RTI.

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RTI will be fully in place by April 2013 and employers will be ‘invited’ to join RTI nearer the time. Unfortunately, this is an offer that you cannot refuse and I will continue to work with you to ensure that this change takes place as smoothly as possible. If you have any questions, please let me know. EXTRACT OF EMAIL DATED 25 MAY 2012 You may be aware that, over the next year or so, HMRC is planning to introduce a new payroll regime called ‘Real Time Information’ (RTI). There is information concerning this initiative here http://www.hmrc.gov.uk/rti/index.htm RTI will, if it works, make the current system of year end work for the completion of Employer’s Returns on forms P35/P14 redundant. Instead, employers will be required to make declarations to HMRC at the time of making payments to its employees. Eg, if you pay your employees a monthly salary, you will need to make 12 monthly declarations at the same time as making the payments, ie, in real time. HMRC are making these changes in order to allow the correct and appropriate allocation of Universal Credits when these are introduced. What will this mean to you? In the main, I am working with HMRC and my payroll software provider to ensure that, as far as possible, you and I can continue to deal with the payroll in much the same way as before. The main change that I envisage is that, at the time of advising you of the employees’ net salaries, and the PAYE tax/NIC liabilities to be paid to HMRC, I will also need you to specifically confirm your acceptance of the calculations so that I can then make the necessary RTI submission to HMRC. You will then pay the salaries and make appropriate payments to HMRC as before. Leading on from this, another change will be to ensure that whatever liabilities are due each month are paid to HMRC at the right time. This will continue to be your responsibility but you need to be aware that HMRC will now know exactly what is due to be paid so that it can compare this with what is actually paid and issue penalties for any underpayment. The penalties can be particularly onerous as they increase depending of employee numbers and length of time outstanding. This is not, in fact, a change as the penalties have been with us for a few years but, to date, HMRC have not been able to easily allocate them as it only receives an annual summary of liabilities, not a monthly summary. Under RTI, the monthly data will be there. As indicated above, I am working towards the introduction of RTI and will keep you informed as appropriate. If, however, you have any specific queries concerning the above, please let me know.