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| Payroll Staff Wanted |
Client in Camberley London needs up to 10 payroll people at all levels, for new team.
If you can help at all please contact Reg Ruffle at reg@hrdps.co.uk or 01295 225500
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Telephone: 01295 225500
News Items – at 25th April 2007
The Child Support Agency, responsible for enforcing the payment of child maintenance, has issued a new guidance booklet for employers, CSL313 What is my role in helping my employees pay child maintenance?. In particular, it includes a section explaining how voluntary deduction from earnings arrangements are set up and how they differ in operation from Deduction from Earnings Orders.
Further information:
CSL313 What is my role in helping my employees pay child maintenance? http://www.csa.gov.uk/pdf/english/leaflets/new/CSL313.pdf
HMRC issued penalty notices in March to employers and contractors who appeared not to have filed their 2005/06 year-end Returns electronically but who were required to do so. Following complaints over the penalties, HMRC issued an apology on 17 April to those employers and contractors who had sent a test Return but who were led to believe, as a result of the message they received after filing, that the Return had been accepted for processing.
Test returns are checked when they are filed electronically but not processed. Employers have to follow up a test return with their actual return. If they don’t, they are treated as not having met the electronic filing requirement.
The complaints about the penalty notices arose because the wording of the message issued automatically after returns were filed electronically was the same for both test and actual Returns. As a result, employers and contractors who had not realised they were sending a test return or who, having read the return message, believed that the test Return had nevertheless been accepted, failed to send their actual Return.
Employers and contractors affected may appeal against the penalty notices in writing but must also send in the actual return immediately, doing so electronically unless they are employers with fewer than 50 employees. HMRC states that “in these circumstances we expect to discharge the penalty once we have received and processed your actual return”.
The deadline for making an appeal has been extended to the end of April 2007 – not a very useful extension in view of the announcement not being made until 17 April.
The automatic message that is issued on receipt of a Return was changed on 19 April. It now reads:
“Thank you for sending the PAYE End of Year submission online.
The submission for reference XXX/XXXX was successfully received on DD-MM-YYYY. If this was a test transmission, remember you still need to send your actual Employer Annual Return using the live transmission in order for it to be processed.”
This is still not a helpful message as it does not distinguish between actual Returns and test Returns. It does not help a submitter who is unknowingly sending a test Return and it is likely to raise more queries than it resolves. HMRC has advised us that, because the Government Gateway cannot currently distinguish between “live” and “test” messages, only one acceptance message can be sent. However, HMRC is working with the Gateway and hopes to be able to arrange for the Gateway to send separate messages next year.
Once each “live” or “test” message has been checked, HMRC sends one of two different messages to the employer, namely
- “9001: This submission would have been successfully processed if sent under non test conditions”, or
- “9004: The EOY Return has been processed and passed full validation’.
The message is sent by HMRC to the software that made the original submission so, in the case of returns that have been filed using payroll software, the way in which the employer receives the message depends on how the developer has designed the system. HMRC suggests that employers should check with their developer how and where they will see these messages.
The second message, sent by HMRC to the employer is, therefore, the important message for employers, not the initial Gateway message
Further information:
PAYE: 2005-06 penalty update http://www.hmrc.gov.uk/paye/05-06-penalty-update.htm
Payroll deadlines during the next month
May 3 – This is the date by which any changes to the provision of company cars in the three months to April 5 must be reported using form P46(Car).
May 5 – This is the final day of tax month 1. Tax and NICs etc for payments made in the tax month to May 5 are due for payment to the Accounts Office by May 19, or by May 22 if paid electronically.
May 18 – (May 19 is a Saturday) – 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.
May 18 – (May 19 is a Saturday) – This is the deadline date for filing, in paper form or electronically,
- form P14 End of Year Summary
- form P35 Employer Annual Return
- form 38A Supplementary Return
May 22 – 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 May 18 at the latest.
May 26 – The date after which non-receipt by the HMRC of year-end returns P14s, P35 and P38A will result in late-filing penalties.
May 31 – This is the deadline for issuing P60s to qualifying employees.
Payroll FAQ's
Shared Use of a Company Car
Although this question is phrased so as to apply to a company car that is made available for the private use of two employees concurrently, the following notes apply in the same way if the car is made available to more than two employees concurrently.
Assuming both employees are earning at a rate of £8,500 or more, each of them incurs liability for a car benefit charge and, if fuel is provided for private use, a fuel benefit charge, under the provisions of sections 120 and 149 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA).
The car and fuel benefit charges could be calculated by simply splitting the charges for one car between the two employees, but that may not be appropriate. The car charge may relate to factors relevant to each employee, thereby creating a different car benefit charge for each of the employees sharing the car. One of the employees should not benefit or lose out due to circumstances relating to the other employee.
Section 148 of ITEPA overcomes this problem by defining a requirement for a full car benefit charge to be calculated initially for each employee sharing the car. The individual charges are then reduced “on a just and reasonable basis”, rather than being apportioned. The total of the resulting charges at this step of the car benefit charge calculation should add up to the charge that would apply if there were only one driver.
The factors that should be taken into consideration in performing this reduction are not defined but they might include a capital contribution paid by an employee, the number of days that each driver used the car or the relative differences in the extent of the private use. It is likely that, in the event of an audit, a tax inspector would expect to see the details of how the reductions were performed.
Note, however, that the reductions may not take into consideration “private use” contributions made by one or other of the drivers. The step-by-step rules for calculating the car benefit charge require that reductions for “private use” contributions are made after the charges have been reduced for shared use.
A special rule applies if one of the employees sharing the car is a “lower-paid employee”, i.e. an employee who has an earnings rate of less than £8,500. The provision of a shared car does not create a car benefit charge for such an employee and, as a result, the use of the car by that employee may not be used to reduce the charge for the other employee.
As provided by section 153 of ITEPA, if fuel is provided for private use for one or both of the drivers, the fuel benefit charge that would apply if there were only one driver is reduced in the same manner.
Example: A company car is made available for the private use of three employees concurrently. Driver A is a “lower-paid employee” and uses the car for private use during the working day. Driver B takes the car home on Monday, Tuesday, Wednesday and Thursday nights. Driver C has use of the car on Friday night and each weekend. All three drivers are provided with fuel for private use. Drivers B and C each pay £40 per month towards the private use of the car.
The employer calculates what would be the car benefit charge if there were only one driver. The reportable benefit would be £3,000 (20% (say) of £15,000) for the car and £2,880 (20% of £14,400 for the fuel).
In the case of Driver A, the employer calculates that what would be the reduced value of the car and fuel benefit charges, when added to the employee’s earnings, is still less than £8,500. As a result, there is no reportable benefit and Drivers B and C must share the car and fuel benefit charges between them.
In the case of Drivers B and C, the employer considers that they have equivalent usage in respect of the time the car is available to them, so decides it would be “just and reasonable” to base the reduction on their relative private mileage. Driver B travels 3,000 private miles in the tax year; Driver C travels 9,000 private miles in the tax year.
The charges for Driver B are
- £270 for the car, i.e. (£3,000 × 25% reduction) - £480 private usage
- £720 for the fuel (£2,880 × 25% reduction).
The charges for Driver C are
- £1,770 for the car, i.e. (£3,000 × 75% reduction) - £480 private usage
- £2,160 for the fuel (£2,880 × 75% reduction).
Note that the two car benefit charges, plus the two private usage payments, add up to £3,000, the charge (before private use payment) that would have applied if there had been only one driver.
Readers Newsletter Forum
If you have any HR or payroll related questions that you think other people who receive this newsletter will be able to answer, please email us and we will add your question to our newsletter.
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contact: daniel.ruffle@hrdps.co.uk or reg@hrdps.co.uk
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