By Lynne Cramb, Director of Payroll, DTE Business Advisers
April 2013 saw the introduction of Real Time Information (RTI) to payroll to govern the reporting requirements for the collection of tax and NICs under PAYE. It requires all employers to submit information, including details of earnings and the tax and NICs deducted, each time a payment is made to an employee – on or before payment day. In the time that has since elapsed, lessons have been learned and here are my recommendations on how to overcome some of the key pitfalls I have identified along the way.
1. Employer Payment Summary (EPS). Recoverable amounts must be entered as cumulative year to date figures each month. However, you can now inform HMRC up to tax year-end if employees will not be paid. To do this, enter dates in the ‘period of inactivity’ fields in your EPS.
2. Quarterly payrolls. Nil returns are still being missed by HMRC so make sure you have registered the fact that there will only be four Full Payment Submissions per year to flag it up.
3. P45s are being judged as ‘late reporting’ by HMRC if the employees leaving date is in a previous pay period. Make sure your Full Payment Submission (FPS) includes the reasonable excuse field prior to submission.
4. Weekly and Monthly submissions. Register with HMRC the fact that you are running both frequencies to avoid late filing notices as they are looking for a specific number of submissions per month. Late filing notices are now attracting penalties for any employer with over 50 employees.
5. Duplicate records. Duplicates occur when taking on a new payroll that has already filed submissions with HMRC. To avoid duplication ensure the old pay reference is stated on the new record.
6. Debt resolution claims. These could be required when HMRC’s Debt Management & Banking Department is erroneously chasing payments not due. Once contact is made with HMRC watch for advice from HMRC employees to file an Earlier Year Update - especially when the dispute is in the current year - or to submit a new file with negative figures. If your figures are correct then changing them isn't the solution.
7. The Penalty regime started on 1 October 2014 for all companies with over 50 employees, those under 50 will receive penalties from 6 March 2015. All Generic Notices received need to be investigated and appeals lodged to ensure you do not receive fines of up to £400 per month.