News Items – at 17th September 2007

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See Payroll FAQ's Below

Payroll deadlines during the next month

September 19 – For employers required to pay tax and NICs etc to the Accounts Office monthly, this is the deadline for payment to be received by the Accounts Office, unless made electronically.

September 21 – (September 22 is a Saturday) – For employers required to pay tax and NICs to the Accounts Office monthly, this is the deadline for electronic payments to be cleared into the HMRC bank account.  Payments through BACS must be initiated by September 19 at the latest.

October 5 – This is the final day of tax month 6.  Tax and NICs etc for payments made in the tax month to October 5, or in the tax quarter to October 5, are due for payment to the Accounts Office by October 19, or by October 22 if paid electronically.

Payroll FAQ's

Casual Workers

How are tax and NICs handled for casual workers?

Many employers have workers who are called “casual” workers.  These are often people who do not work regularly but who are called in to work as and when the employer has the work, perhaps during the summer season, over Christmas, at harvest time, or at other times of peak production or trading.  These are not casual workers for PAYE purposes.  They must be treated as all other regular employees.  They should be asked for a P45 when they start and, if they cannot provide one, the P46 procedures must be followed.

For PAYE purposes, a “casual” employee is someone who

• does not produce a current P45, and
• is engaged to work on a single occasion for a period of not more than one week (or two weeks in the case of harvest casuals engaged by farmers), and
• is not expected to be employed again within the current tax year.

However, normal P45/P46 procedures apply if

• those conditions are not met, or
• the employee stays for more than one week (or two weeks if a harvest casual), or
• it is expected that the employee will be employed again within the current tax year.

If the employer is confident that the employee is a “casual” employee for PAYE purposes, the procedures to be followed depend on the employee’s level of earnings and what the employer knows about the employee’s work arrangements elsewhere.  If the total pay for the week

1. exceeds the PAYE threshold (i.e. £100 for 2007/08) and it is known that the employee has other employment, tax is deducted using code BR, NICs are deducted, and form P45 is issued at the end of the employment.
2. exceeds the PAYE threshold but it is not known if the employee has other employment, tax is deducted using the Emergency Code (i.e. 522L for 2007/08) on a Week 1/Month 1 basis, NICs are deducted, and form P45 is issued at the end of the employment.
3. is less than the PAYE threshold but equal to or more than the NICs lower earnings limit (LEL) (i.e. £87 for 2007/08), zero tax is recorded against a code of 'NI', NICs are recorded as NIL, and no form P45 is issued at the end of the employment.
4. is less than the LEL for NICs, no deductions are due and no P45 is issued at the end of the employment.
   

In situation 3, the code ‘NI’ is not a tax code and is used for manual recording on form P11 only.  It must not be used on a P14 End of Year Summary.  Most computerised systems use the tax code ‘NT’ in this situation.

In the first 2 situations, where there are tax and NICs values to record, and in situation 3, where the employee is treated as having made a contribution, the employer must create a payroll record on a P11 Deductions Working Sheet, or on a computerised payroll system.  A P14 End of Year Summary must be created for the employee at the year end.

In situation 4, where there are no tax or NICs details to record, a payroll record does not even have to be created, either manually or on computer.  The employer may simply record the employee’s name, address and amount paid.  No P14 End of Year Summary is required.  The employer must, instead, complete a P38A Employer’s Supplementary Return.  As the employee’s earnings are less than the LEL, no details of the employees or their earnings need be entered.  The employer has only to sign and date the declaration that “I have made no payments that need to be listed above”.

Many employers with computerised payroll systems find it safer and simpler to put all casual workers on the payroll, irrespective of their earnings.  This is acceptable to HMRC.  Handling the pay of casual employees in this way removes the risk of their pay being taken out of petty cash and the payroll office not being notified about them.  At the year end, a P14 End of Year Summary may be produced, even though there are no tax and NICs to report, and it is, as a result, unnecessary to complete a P38A Employer’s Supplementary Return.   

There are somewhat different procedures to apply in the case of casual harvest workers.  See CWG2 Employer’s Further Guide to PAYE and NICs, pages 64 and 65.

ISLE OF MAN

Online Submission of Company Tax Returns

Enhanced online services launched

The Income Tax Division of Treasury has announced the launch of enhanced online services for corporate taxpayers.

The enhanced Company Tax Service allows companies or their agents to submit tax returns for accounting periods ending on or after 6 April 2007. Supporting documents, such as accounts, can also be submitted with the return. A pdf version of the return can be created and saved or printed for future reference. The return can also be viewed at any time via the online service.

The Income Tax Division will introduce an online tax return submission service for individual taxpayers in the future.

The enhancement of the Company Tax Service is aimed at making it easier for individuals and businesses to interact with the Departments, Statutory Boards and Offices of the Isle of Man Government. A single online entry point gives users access to any currently available service, or service introduced in the future, that they wish to register for.

Further information:
Income Tax Division Launches Enhanced Online Services for Companies  http://www.gov.im/treasury/incometax/viewnews.gov?page=lib/news/treasury/incometax /incometaxdivisio.xml&menuid=Welcome to the Isle of Man Government online service https://www.gov.im/onlineservices/Welcome.iom

REPUBLIC OF IRELAND

Mandatory electronic filing and payments

Revenue to start consulting on mandatory electronic filing of tax returns and payments

The Revenue Commissioners have announced that they are to begin a detailed and wide-ranging consultation process with tax practitioners, industry representative bodies, software providers and customers with a view to introducing a requirement that tax returns and payments for specific categories of taxpayers must be made electronically through ROS, the Revenue Online Service.

ROS has already achieved significant electronic return filing and payment rates to date.  Some 2.6 million returns or forms were filed via ROS in 2006 and €16.6 billion in payments made.  However, a considerable number of fully computerised businesses still remain outside the ROS system. The aim is to bring these businesses within ROS, on a phased basis, commencing with certain returns and payments due by larger companies in 2009.

There is recognition, however, that mandatory electronic filing and payment would be inappropriate for some small businesses and Revenue intends to devise a much simplified paper return for these businesses so as to make their tax compliance easier.

Legislation providing for mandatory electronic filing and payment was passed by the Oireachtas in the 2003 Finance Act, subject to a Commencement Order to be made by the Minister for Finance. Once the consultation process announced today is completed and the necessary Commencement Order has been made by the Minister, Revenue and will then make regulations governing the implementation of mandatory electronic filing and payment.

Further information:

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