RTI early verdict & other PAYE related news



RTI early verdict & other PAYE related news

April 16, 2013 2013


Real Time Information

It is early days for RTI given that we are only 11 days in to the new tax year but how are things going with this new system for reporting payroll payments and deductions so far ?

If you listen to HMRC, or believe everything you read, things are wonderful. The new Employer Bulletin just published by HMRC proclaims:

"79% of the first employers to try RTI thought it was easy". "The first employers to try RTI felt as confident or more confident than they did using the existing PAYE system". "66% of the first employers to try RTI said the PAYE burden will be less in the future because of RTI"

Feedback from clients so far is maybe not as enthusiastic as this but still, on the whole, more positive than expected. Yes, there have been a number of teething problems in making the first FPS (Full Payment Submission) for some clients but it seems to us that most of the issues have come about through a lack of understanding of what is needed for the FPS or in how the payroll software functions. There have been reports of issues from the HMRC side as well which mostly seem to be caused by delays in acknowledging receipt of the FPS.

Overall verdict has to be that it is too early to consider whether RTI is going to work or not. Maybe once everyone is more in tune with the new software being used we can get a clearer picture of how RTI is going and what needs to be addressed for the longer term.

In the meantime, HMRC has issued some additional guidance to clarify a few points on RTI  National Insurance Number Verification Requests and  Submitting forms P45 and P46 for 2012/13


Employee shareholding status

Unsurprisingly, the proposal reaffirmed in the Budget to give some tax incentives to employees receiving "free" shares for giving up some employment rights has been rejected by the House of Lords. We always believed such a scheme was madness as any employee with any sense would steer well clear of such an arrangement. It is clear that the Government is very keen on this scheme, however, and so they may try to push this through again possibly after making a few tweaks to the proposals.

Reporting Benefits and Expenses

HMRC has introduced a new, online, method for employers to report expenses and benefits each year.

Before everyone celebrates the demise of the dreaded P11D this new method of reporting is extremely limited and only applies when an employer is reporting a nil P11D and P11D(b) return or to give HMRC advance notice that all benefits and expenses have been taxed through payroll and therefore no taxable values will ultimately be declared on forms P11D (which strictly still need to be done).

HMRC has suggested that this functionality may be expanded in due course but we won't hold our breath in this completely removing the P11D burden for employers.

Employment Income Manual update

For the first time in a while, HMRC has updated its EIM, the summary of changes is here.

As ever, it is hard to see exactly what has changed, probably just a few words here or there. We haven't reviewed the amended pages in any great detail yet though so we must put that on our "to-do" list for later (oh joy).


Any questions or concerns about any of the above just let us know.



PAYE update 15 March 2013 - shares, EBTs, IR35 & RTI



PAYE update 15 March 2013 - shares, EBTs, IR35 & RTI

March 15, 2013 2013

It's Friday (thank goodness Smile) and us PAYE folk are all busy what with year-end stuff and RTI and whatever so let's just do a brief update on some relevant employment tax issues for now so that we can all get on with what we need to do and enjoy some of the weekend when it comes.


The latest issue of the Employment-Related Shares & Securities Bulletin was issued by HMRC this week and is worth a read if you offer any sort of share plan to your employees. Click here to get the bulletin.

There's more in this bulletin around the draft legislation published in December and HMRC's position on approving schemes changed in anticipation of this legislation being confirmed. HMRC also clarify a change in their stance on s.431 elections in a CSOP (Company Share Option Plans) as well as further proposed changes on SAYE schemes.

Employee Benefit Trusts

A number of assessments have been issued by HMRC in recent weeks around the use of EBTs.

We suspect this is simply to protect HMRC's position in view of the ongoing Rangers FC EBT case which could rumble on for years so that HMRC are not time barred from collecting the extra tax/NI if they ultimately win the Rangers case.

Anyone in receipt of such an assessment should speak to the EBT provider or the advisers who helped set up the EBT arrangement in the first place. Otherwise give us a call, we would be happy to help.


Confusion is mounting around the proposed changes to IR35 announced in December and which will come into force on 6 April (subject to anything else to come out of next week's budget) around the inclusion of Directors and other Office Holders.

The confusion centres around how existing legislation around Office Holders will work with new IR35 legislation and whether there will still be conflicting rules and guidance on this when the new rules bed in.

If the Government / HMRC can't even implement what should be a simple change effectively, maybe it is time to scrap IR35 and start again? Maybe the next few weeks will clarify things.....


C'mon, RTI is such big news just now it would have been wrong to ignore it in this blog. Wouldn't it ??! Undecided

Exactly three weeks to go and the hysteria is mounting. Look at any finance forum or tax magazine just now and the questions and concerns are flooding in and this is representative of client queries we are having as well.

Now that most employers have sorted out their data (said in hope possibly ?!!), most of the questions cropping up are around the day-to-day practicalities of operating payroll in real time. Popular themes include

- The application of RTI for directors who take irregular or small salaries

- The requirement to include expenses paid through payroll whether taxable or not and irrespective of whether covered by a dispensation

- The timing issues around third party information e.g. share plans and expats

- The RTI penalty provisions

As ever, if you have any immediate concerns on RTI give us a call. Don't just ignore it as we will be RTI'ing before we know it.

Have a good weekend all Smile

PAYE Randoms 25 July 2012



PAYE Randoms 25 July 2012

July 25, 2012 2012

No, we haven't dropped off the face of the earth, it's just been peak holiday season here at Optimum "Towers" and so we have struggled to keep our blogging going over the last few weeks. We're sure no-one missed us too much though !

Anyways, we were fully anticipating a barrow load of news to report on our return to the fold but have been sadly disappointed with what little has actually happened on the PAYE front in the last few weeks. Yes, there has been plenty action around RTI but this will be the subject of our July article over the next few days and so we don't want to peak too soon !

Blink and you'll miss it but here are the headlines to bring us all up to date:

Restaurants and takeaways

HMRC are still aggressively pursuing this sector, we were involved in another case a few weeks ago where HMRC were challenging fuel payments to delivery drivers and general payroll procedures amongst other things. Yet again, HMRC's technical arguments were weak in this case but the sector does not do itself any favours by not keeping good records. We fully expect more cases to come out of the woodwork in the months ahead.

Withdrawal of Form P38(s)

HMRC confirmed that the P38(S) will no longer apply after 5 April 2013 and therefore employers will need to treat students the same as all other new employees when starting them on the payroll after this date.

Employment Related Shares and Securities Bulletin

A new bulletin was issued by HMRC around share based payments and schemes, some of which is new but other bits have previously been announced. It is worth a glance though if you provide any share based payments to employees.

First Tier Tribunals - Three recent  judgements worth noting from a PAYE perspective are:

Coopers & Ors (Leaside Timber & Builders Merchants Ltd) v HMRC - the involvement of a partnership in providing cars to family members of the company directors was not successful in avoiding company car benefit in kind charges on the directors.

Graham Paterson Ltd v HMRC - another case lost to HMRC around Seafarers Earnings Deduction which involved the usual argument as to whether the offshore rig was a ship or permanent structure.

Hayward v HMRC - another win for HMRC this time in relation to a Payment In Lieu of Notice which the taxpayer had argued was a payment of redundancy qualifying for the £30k tax exemption. This case reiterates the point that a compromise agreement does not dictate the tax treatment of termination payments - it is the normal contractual terms that does this.

That's all for now folks...


PAYE related bits n bobs 26 June 2012



PAYE related bits n bobs 26 June 2012

June 26, 2012 2012

In the absence of any groundbreaking news or Tribunal judgements recently, we finish off this month's blogs with a very brief overview of some things that have maybe not been newsworthy on their own but are useful things to know collectively.

Salary sacrifice guidance

HMRC has recently amended their FAQs on salary sacrifice to accommodate the relaxation of the rules around the opting in/out of pensions salary sacrifice so that salary sacrifice can happily co-exist with the pensions auto enrolment rules.

Whilst we would never recommend that HMRC's guidance is taken as "gospel", these FAQs are worth a read if you're unfamiliar with HMRC requirements around salary sacrifice.

Changes to the NI Manual

A number of pages were withdrawn from the NI Manual last week, all of which related to the NI exemptions around "qualifying childcare" for employees receiving employer supported childcare.

There is nothing sinister about these changes though, HMRC are just revising the guidance so that it is up to date and accurately reflects the revised legislation which came into place on 6 April 2011 around the reliefs that are due for new childcare arrangements.

Share based payments guidance

Yet more revised guidance from HMRC, this time what employers need to do when share based payments are made to departing employees after the P45 has been completed.

This has came about following some confusion from both employers and HMRC on the treatment of payments involving a mixture of cash and shares.

By the time some employers (and HMRC) get to grips with this, it will be time to worry about the situation under RTI where some real fun and games will be happening !

P11D and PSA filing

As Sir Alex Ferguson once infamously said, it's getting to "squeaky bum time" for getting the P11Ds and PAYE Settlement Agreements off to HMRC by the deadline of 6 July. He didn't exactly say this in relation to P11Ds and whatever but you get our drift !!

If you are one of those employers that didn't realise the deadline is next week, or has never seen a reminder from HMRC that the time is nigh, you really need to get moving, and fast, otherwise the 'squeak' could develop into something much worse !

Medical professionals

Reports are coming out, e.g. this Guardian article from a few days ago, that HMRC are currently investigating more than a 1,000 medical professions who are suspected of under declaring tax on income following the tax 'amnesty' that was offered to the sector a while back.

Whether these reports are valid, or whether HMRC has the evidence and gumption, to follow through successfully in some of these cases remains to be seen. There is usually no smoke without fire though so any medical person who thinks they may be "in trouble" needs to pick up the phone to an advisor ASAP.

Okay, next stop July. Hopefully the summer weather will eventually come out next month, before it's time for Autumn. Cool


PAYE news roundup 20 April 2012



PAYE news roundup 20 April 2012

April 20, 2012 2012

April tends to be one of the most challenging months for us in terms of blogging and updating our website, etc. Not only is it one of our busiest months of the year in terms of helping clients with year-end stuff, which limits the time we have to do some of the admin, but our clients are also too busy to be reading much tax technical bumph, or any bumph for that matter.

We do get many, many positive comments however on our regular blogs and technical articles and it is important to us to keep our website and our clients and contacts as up to date as possible with whatever is happening in the PAYE world. Hopefully this blog post ticks all the boxes we need to at this stage in the month - passing on any relevant news but keeping it short and sweet, i.e. so that it can be read (and discarded !) within a few minutes.

So, without any further ado, let's get on with a quick news roundup:


Pensions auto enrolment

HMRC has confirmed that they will be changing their guidance to ensure that salary sacrifice and pensions auto enrolment rules are compatible so that employees who opt-out of auto enrolment are not out of pocket or put the employer's pension salary sacrifice arrangements at risk.

This is a welcome announcement as it was causing some anxiety in some quarters. Revised guidance to follow on this.

Real Time Information

The RTI pilot has started with a handful of employers which will increase over the next couple of months. This will be a moving feast before the final go-live date of October 2013 with much feedback to be shared and changes announced before the arrangements are finalised we are sure. Watch this space as they say...

Late P35 penalties

HMRC has provided further details in the April Employer Bulletin around the issuing of late filing penalty notices for 2011/12 P35s following much criticism and cases hitting the Tribunal after last year's delays in issuing letters to employers. Hopefully this will mean that any employer who files late this year, either intentionally or by mistake, will be aware nearly straight away that they are in a penalty situation thus avoiding silly situations where disproportionate penalties are allowed to build up before the matter is dealt with.

Tax Cases

The only one of note recently that wasn't to do with penalties and reasonable excuse arguments was the case of G R Solutions Ltd v HMRC. Yet again, this case involved the argument of whether a company car and car fuel scale charge applies where unusual car ownership arrangements exist. And, yet again, HMRC won the case, as they do in most cases involving company cars, by virtue of the legislation that states (quite clearly in our view) that BIK charges apply where 1) ownership of the car does not pass to the employee, 2) the car is available for private use (whether it is actually used or not) and 3) that the car is made available by reason of the employment. When will these employers/directors ever learn ??

Salary sacrifice warning

It was reported this week in the press that Pendragon, the UK's biggest car dealer and also a major car leasing firm, has been hit with penalties for falling fowl of National Minimum Wage legislation when allowing employees to participate in salary sacrifice arrangements - some of which involved cars would you believe.

This is yet another example that a) big employers don't always know best and b) silly mistakes like this can easily be made on salary sacrifice without appropriate tax advice and support from, ahem, someone like Optimum PAYE. Embarassed

We know we keep banging on about the care needed around salary sacrifice but clearly some employers are still ignoring us !!


Ok, that's enough for now. Back to year-end duties !

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