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| Outstanding value with in-house courses! |
We are currently offering in-house training through the months of June, July and August 2008 at £797 per day, + £40 per head + tutor expenses + VAT.
For example: 10 delegates in Birmingham on a full day course would cost £1250 just £125 per person + VAT. So if there is any ‘top-up’ training needed the price structure through the summer makes it very cost effective.
Phone the office for more information: 01295 225500 |
News Items at - 10th July 2008
We have a mixed bag of news items this week, including some further clarification on the introduction of the higher personal tax allowance in September in the context of the Simplified PAYE Deduction Scheme (used for example to pay nannies) and P38(S) students.
The promised simplification changes to the SSP scheme have now been confirmed in the form of Regulations. From 27 October, a new and less time consuming SSP1 form will come into use and form SSP1(L) will be scrapped. The Regulations for other October changes are currently awaiting Parliamentary approval and we hope to review these soon.
This week’s FAQ is a reminder for large employers of the need to meet the 22nd of each month electronic payment deadline
Last week’s news item is repeated here as it contained a minor error and the official document has now been posted on the HM Courts Service website.
With effect from 2 June 2008, the maximum daily rates of the financial loss allowances available to jurors have been increased by 2.2%, as follows:
Period of Jury Service |
Maximum Financial Loss Allowance |
4 hours or less on any day |
More than 4 hours on any day |
First 10 days |
£30.64 |
£61.28 |
From 11th day up to 200th day |
£61.28 |
£122.57 |
From the 201st day |
£107.59 |
£215.17 |
Further information:
Allowances Sheet http://www.hmcourts-service.gov.uk/docs/infoabout/juryservice/Allowances-May2008.pdf
The Employment Bill, currently before Parliament, includes measures to repeal the statutory dispute resolution procedures and replace them with a new regime involving an Acas statutory code of practice on disciplinary and grievance procedures.
Other related reforms, which would involve secondary legislation, are also being considered by the government and the Department for Business Enterprise and Regulatory Reform (DBERR) has published a consultation document that seeks views on the following changes.
1. Compromise agreements: For an agreement to be lawful, the employee must have received advice from an “independent advisor”. These currently include qualified lawyers, legal executives, certified trade union members and certified advice centre workers. They must be competent to give advice, have insurance or professional indemnity cover, and must be independent, i.e. not employed by the employer. The proposal is that the list of permitted advisors should be extended to include qualified members of the Chartered Institute of Personnel and Development (CIPD), many of whom already play a role in negotiating compromise agreements.
2. Interest on unpaid tribunal awards: Interest, at 8%, is currently charged on unpaid employment tribunal awards, although the date from which it is accrued is different in the case of awards for discrimination and equal pay cases than in other cases. The proposals are to allow the interest rate to “float”, e.g. at a defined rate above the Bank of England base rate, and to apply the accrual date used for discrimination and equal pay cases to all situations, namely from the day following the tribunal’s decision unless full payment is made within 14 days (as set by decisions of the European Court of Justice).
3. Recommendations in discrimination cases: Employment tribunals are currently able to make recommendations that an employer change policies and practices where it has been found to have discriminated against an employee, in order to prevent the discrimination continuing. The proposal is to extend that arrangement to situations where the employee has left the employment but other employees may also be vulnerable to the same kind of discrimination. There would not be any penalty if the employer did not make the recommended changes but failure to do so would be taken into consideration if another employee subsequently made a related claim of discrimination.
4. Determinations without a tribunal hearing: The proposal is that tribunal claims in cases claiming unlawful deductions from wages, breach of contract, redundancy pay, holiday pay and the national minimum wage could be considered by an employment judge without a hearing. Such a written determination would require the consent of the parties and there would be no monetary limit on eligible claims, other than for breach of contract cases which are limited to an award of £25,000. Decisions may be appealed to the Employment Appeal Tribunal.
5. Holiday pay claims heard by judge sitting alone: An employment tribunal judge is able to hear cases alone in a number of jurisdictions, for example, national minimum wage cases. The proposal is to extend this arrangement to cases involving entitlement to statutory holiday pay.
6. Changes to tribunal procedures regulations: A number of minor amendments are proposed, related to interim relief hearings, time limits, default judgements, electronic communications, withdrawal of proceedings, equal value hearings and qualification periods for employment judges.
7. Transitional arrangements: The commencement date for the new dispute resolution procedures is expected to be 6 April 2009. The proposal is for the existing statutory procedures to apply to cases where the act leading to the grievance has started or taken place and/or the employer has contemplated taking or started disciplinary action prior to that date.
8. Tribunals Service transformation: A number of measures intended to improve the effectiveness and efficiency of the Tribunals Service, including the appointment and role of Tribunals Presidents, are proposed.
The closing date for the consultation is 26 September 2008.
Further information:
Dispute resolution: secondary legislation consultation http://www.berr.gov.uk/files/file46775.pdf
The owners of a Sheffield butcher's shop have been ordered to pay over £11,000 to two former employees after they failed to pay the National Minimum Wage (NMW). It is the fourth successful NMW criminal prosecution and the first for deliberately not paying the National Minimum Wage.
The six potential criminal offences under section 31 of the NMW Act, each of which carries a maximum £5,000 fine and a criminal record, are:
- employer refuses or wilfully neglects to pay NMW
- person fails to keep or preserve records
- person knowingly causes or allows false entry in records
- person produces or furnishes false records or information
- person delays or obstructs compliance officer
- person refuses or neglects to answer any questions or produce documents for compliance officer.
The father and daughter proprietors pleaded guilty to neglecting to pay two former employees the NMW, failing to keep adequate pay records, and making false entries in the records. The father produced the false records in an attempt to show HMRC compliance officers that they had been paying the correct amounts.
The father was fined £700 (plus costs) and ordered to pay £9,065.85 in compensation to the two former employees. The daughter was fined £100 (plus costs) and ordered to pay £2,009.74 in compensation. The compensation must be paid by 1 October 2008.
Further information:
Sheffield butchers prosecuted for non-payment of minimum wage http://nds.coi.gov.uk/Content/Detail.asp?ReleaseID=372776&NewsAreaID=2
The Department for Work and Pensions (DWP) is running a pilot study to assess the use of electronically generated medical statements (form Med 3) as an alternative to the handwritten version that is currently used.
The pilot study involves approximately 20 GP practices in Wales and only employers with employees registered at those practices will potentially be affected. These employers may receive electronically generated Med 3 forms from their employees between July and November this year and, as they are just as valid for SSP purposes as the handwritten ones, they should be processed in exactly the same way.
The pilot version of form Med 3 is very similar to the existing version:
- it is printed on one side of an A4 sheet of paper
- there is a 2D barcode next to the name and address of the doctor
- information will have been typed onto the form rather than handwritten
- the form will be signed by the employee’s GP
- there are two versions of the pilot form, one in English and one in Welsh
The pilot study forms part of work that is currently under way on the medical evidence that is available to employers. It runs from July to November and will conclude with the publication of a report at the end of the year. Any further actions or developments will then be considered.
Further information:
Electronically generated form Med 3 medical statements http://www.hmrc.gov.uk/employers/med-cert-pilot.htm
Amendments have been made to the Statutory Sick Pay (General) Regulations 1982 that make it possible for the administration of SSP to be simplified in two respects from 27 October 2008.
1. Requirement to provide SSP history on form SSP1. Exclusion form SSP1 is completed by an employer and given to a sick employee when the employee does not qualify for SSP or has been receiving SSP but no longer qualifies to receive it. The information that the employer has to enter on the form to enable the employee to make a claim for incapacity benefit (IB) is specified in the Regulations. In order to determine entitlement to IB, the employer has to provide detailed information about the SSP already paid to the employee, the employee’s qualifying days and SSP payment history.
From October 2008, IB will start to be replaced by a new benefit, Employment and Support Allowance (ESA). It will be paid to individuals who
- have an illness or disability,
- have not claimed IB within the past 2 years, and
- are not entitled to SSP or are no longer entitled to SSP.
However, unlike IB, the level at which ESA is paid will not depend on the length of an employee’s sickness absence.
ESA will be paid to new claimants from 27 October 2008 but IB will continue to be paid to individuals who retain entitlement to it under the linking rules. As a result, form SSP1 is being amended from October 2008 so that ongoing entitlement to IB or ESA is shown as the reason why the employer cannot pay SSP. As the employee’s SSP history is no longer relevant for ESA, the new form will no longer require the employer to enter the history details. The amended Regulations, therefore, require the employer to provide simply
- the reason why SSP cannot, or can no longer, be paid, and
- the date of the last day for which the employer was liable to pay SSP to the employee.
2. Requirement to issue form SSP1(L) to pass to new employer. If an employee falls sick after starting work for a new employer and had been paid SSP by the previous employer within the 8-week linking period, the new employer is required to take into consideration the length of the earlier period of sickness so that payment of SSP stops when the 28-week maximum is reached. To enable this to happen, the previous employer is required to issue a form SSP1(L) Leaver's Statement of Statutory Sick Pay if the employee asks for one. As the highest rate of IB is more than the rate of SSP, it would be in the interests of some employees to have their period of sickness with the previous employer included so that they can receive the higher rate of IB earlier than they would otherwise receive SSP.
However, as it is not beneficial to most employees to ask for a form SSP1(L) and give it to their new employer, the form is hardly ever used. As a result, the government has decided to discontinue its use altogether from 27 October 2008. Any period of SSP with the previous employer will no longer be used by the new employer. An employee’s maximum 28-week entitlement to SSP will depend entirely on periods of incapacity for work with the new employer.
Further information:
The Statutory Sick Pay (General) (Amendment) Regulations 2008 http://www.opsi.gov.uk/si/si2008/pdf/uksi_20081735_en.pdf
Explanatory Memorandum to the Statutory Sick Pay (General) (Amendment) Regulations 2008 http://www.opsi.gov.uk/si/si2008/em/uksiem_20081735_en.pdf
The Government has asked the Low Pay Commission (LPC) to prepare a further report on the National Minimum Wages (NMW). The increases recommended by the LPC in its February 2008 Report were accepted by the Government and come into force in October 2008. The next Report, due to be presented in February 2009, will recommend changes to the NMW in October 2009 and provisional changes to take effect in October 2010.
The terms of reference for the Report also asks the LPC to review the current apprentice exemptions and advise whether they are still appropriate. Currently, apprentices are not entitled to the NMW if they are under age 19 or within the first 12 months of their apprenticeship.
Further information:
New Terms of Reference http://www.lowpay.gov.uk/
Consultation on the National Minimum Wage http://www.lowpay.gov.uk/lowpay/LPC2009CONSULTATIONLET.doc
In response to a question, HMRC has provided the following statement concerning the way in which the September increase in the personal tax allowance will be applied to employees who are paid using the Simplified PAYE Deduction Scheme.
“We will be issuing new P12s showing the revised tax codes during the period 26-29 August. The P12s will be issued with a covering letter that explains to the employers what they have to do. We are not issuing a revised P16 booklet as tax tables used for these PAYE schemes are not changing.
Every individual taxed under the Simplified PAYE scheme will get a revised P2, which will include an explanation of why they are getting a new tax code. Tax codes will be issued from 24 August.
The allowances are backdated to April but the nature of the simplified scheme means that we will not expect these employers to deal with any repayments. Instead, HMRC will deal with any refunds due and we will be asking employers to send us the old P12 as soon as they have made the last payment using the old tax code. We recommend that employers send us the P12s by the end of September.
We are looking to choose the earliest practical implementation date in September so that as many employees as possible can benefit from the changes in September.”
In response to a question, HMRC has provided the following statement concerning the way in which the September increase in the personal tax allowance will be applied to students for whom a current form P38(S) is in force.
“A new form P38(S)(2008)(2) is being introduced for use on or after 7 September which reflects the increased Personal Allowance of £6035. Employers may have students who have already declared that their earnings for the year will not exceed £5435. These declarations can remain in place until the end of the year.
If, following the introduction of the increased Personal Allowance, it becomes apparent that the student’s income will exceed £5435 but will not exceed £6035, they must complete a new P38(S)(2008)(2) or equivalent record.
Revised forms will be available from the Employer Orderline from 13 August and on the Revised Employer CD-ROM 2008 (August) Edition.”
Payroll deadlines during the next month
July 18 – (July 19 is a Saturday) – This is the deadline for payment of tax and NICs to the Accounts Office, for tax month 3 by employers who pay monthly, for tax months 1 to 3 by employers who pay quarterly, unless they make their payments electronically.
July 18 – (July 19 is a Saturday) – This is the deadline for payment of Class 1A NICs to the Accounts Office in respect of benefits in kind reported by employers on forms P11D for the 2004/05 tax year, unless they make their payments electronically.
July 22 – For employers who pay their tax and NICs to the Accounts Office electronically, this is the deadline for electronic payments, including payments of Class 1A NICs to be cleared into the HMRC bank account. Payments through BACS must be initiated by July 20 at the latest.
August 2 – This is the date by which any changes to the provision of company cars in the three months to July 5 must be reported using form P46(Car).
August 5 – This is the final day of tax month 4. Tax and NICs etc for payments made in the tax month to August 5 are due for payment to the Accounts Office by August 19, or by August 22 if paid electronically.
Payroll FAQ's
The statutory rules governing the payment of tax and NICs to HMRC each month or quarter are set out in the Income Tax (Pay As You Earn Regulations) 2003.
Regulation 69 says that payments to HMRC must be paid
- within 17 days after the end of the tax period, where payment is made by an approved method of electronic communications, or
- within 14 days after the end of the tax period, in any other case.
Therefore, as long as payment is made by one of the approved electronic methods, the deadline for HMRC to receive cleared payments into its bank account is the 17th day following the end of each tax month or quarter, i.e. 22nd of the month, instead of the normal 19th. The time that a payment is received is presumed, unless it can be shown to the contrary, to be the time that it is recorded in HMRC’s computer systems.
When the 22nd of the month falls on a non-banking day, the electronic payment must be cleared by the banking day immediately preceding that date. For example, as 22 June 2008 was a Saturday, payment was due by Friday, 20 June 2008.
Regulation 199 requires employers who are “large” employers for year-end electronic filing purposes, i.e. PAYE schemes with 250 or more employees and for which a notice to that effect has been issued before the end of December in the previous tax year, to make their payments electronically.
A strict penalty regime applies to “large” employers if HMRC receives their payments late. Regulation 201 describes a large employer being “in default” if a payment is not “received in full” by HMRC by the 22nd deadline if it is made electronically, or by the 19th deadline if it is not made electronically, e.g. by sending a cheque to HMRC. (Note that payment by cheque is an acceptable method of electronic payment if it is paid into a bank or post office with the result that HMRC receives the funds electronically.)
The expression “received in full” is carefully worded in the Regulations. A payment is only treated as being “received in full” if the whole amount of the payment is cleared for HMRC’s use on the appropriate deadline date.
A large employer may, therefore, pay HMRC by sending a cheque each month by post early enough to ensure that, on receiving the cheque, HMRC has enough time to bank it and for it to be cleared by the 19th of the month. HMRC routinely banks all cheques on the same day as they are received, suggesting that a cheque posted on the 16th could be received and processed in time. An earlier posting date would be necessary if the 19th is not a banking day or if a weekend falls in between.
However, there is no certainty of a cheque being handled that promptly. As a result, there is clearly a risk of an employer being in default if reliance is placed on a cheque being received and handled by HMRC in time for it to be cleared by the 19th. This approach cannot be recommended and also makes little ‘cash flow’ sense.
The requirement for a cheque to be cleared by the 19th of the month does not apply to employers who are not categorised as large employers. The requirement for them is only for the cheque to be received by HMRC by the 19th. Such employers may also take advantage of the 22nd deadline for electronic payments, and the Regulations do not currently permit HMRC to impose penalties if the payments are late.
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