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Annual HR and Payroll Conference 2008
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14th Annual HR & Payroll Conference 2008 - 5 March to 8 March 2008
Full details are now available for HRD & Payroll Solutions 14th Annual HR & Payroll Conference 2008, to be held at 18th Century Heythrop Park Hotel, Golf & Country Club, at Enstone near Chipping Norton, Oxfordshire, on the edge of the Cotswolds.
(For you X-Factor fans it was where the recent boot-camp was held for the 200 or so 'hopefuls' - we were considering renaming the Conference the 'taX-Factor')
The dates are Wednesday 5th March to Saturday 8th March 2008 but see please see page 6 of the downloadable PDF brochure for three different options.
Included in Conference price:
- 48 different workshop modules to choose from
- 4 key plenary sessions
- 12 key modules repeated
- 3 breakfast discussion groups
- 'by request' and 'one-to-one' sessions
- 3 nights accommodation
- Breakfast, lunch and evening meal
- Friday evening 'end of conference ball'
- Use of leisure facilities
Special Price
All for just £997 + VAT (£200 off our normal price) , if booked and paid by 30th November 2007.
We look forward to welcoming both new and past attendees to what is regarded by many as 'simply the best' conference for HR and Payroll.
For downloadable PDF brochure and booking form:
http://www.hrdps.co.uk/conference2008.pdf
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News Items – at 28th November 2007
The Immigration, Asylum and Nationality Act 2006 included powers to introduce new measures to tackle illegal migrant working. The headline change, newly announced by the Border and Immigration Agency (BIA), is the introduction from 29 February 2008 of
- a new system of civil penalties for employers who engage illegal migrant workers, with a proposed maximum penalty of up to £10,000 for each illegal worker
- a new criminal offence of knowingly using illegal migrant labour, carrying a maximum two-year prison sentence and/or an unlimited fine
- a continuing responsibility for employers to check the ongoing entitlement of migrant workers to work in the UK.
To avoid incurring a civil penalty because of taking on an illegal immigrant, employers must provide themselves with a “statutory excuse”. To do this they must undertake specified document checks at the point of recruitment and repeat the checks at least once every twelve months for those employees with limited leave to enter or remain in the UK. The newly passed Immigration (Restrictions On Employment) Order 2007 lists the specific documents that must be checked. There are two lists of documents – List A applies at the time of recruitment; List B applies after twelve months have passed, but only in the case of immigrants with limited entitlement to employment in the UK.
The lists make reference to a “Biometric Immigration Document”. This is a new identity card that will be issued to all non-EEA immigrants. As well as reducing the potential for forged documents, the card will reduce the need for employers to be familiar with all of the different forms that immigrants might currently present.
The lists, as they will apply from 29 February 2008, are as follows:
LIST A
- A passport showing that the holder, or a person named in the passport as the child of the holder, is a British citizen or a citizen of the UK and Colonies having the right of abode in the UK.
- A passport or national identity card showing that the holder, or a person named in the passport as the child of the holder, is a national of the European Economic Area (EEA) or Switzerland.
- A residence permit, registration certificate or document certifying or indicating permanent residence issued by the Home Office or the Border and Immigration Agency (BIA) to a national of an EEA country or Switzerland.
- A permanent residence card issued by the Home Office or the BIA to the family member of a national of an EEA country or Switzerland.
- A Biometric Immigration Document issued by the BIA to the holder which indicates that the person named in it is allowed to stay indefinitely in the UK, or has no time limit on their stay in the UK.
- A passport or other travel document endorsed to show that the holder is exempt from immigration control, is allowed to stay indefinitely in the UK, has the right of abode in the UK, or has no time limit on their stay in the UK.
- An Immigration Status Document issued by the Home Office or the BIA to the holder with an endorsement indicating that the person named in it is allowed to stay indefinitely in the UK or has no time limit on their stay in the UK, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A full birth certificate issued in the UK which includes the name(s) of at least one of the holder’s parents, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A full adoption certificate issued in the UK which includes the name(s) of at least one of the holder’s adoptive parents when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A birth certificate issued in the Channel Islands, the Isle of Man or Ireland, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- An adoption certificate issued in the Channel Islands, the Isle of Man or Ireland, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A certificate of registration or naturalisation as a British citizen, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A letter issued by the Home Office or the BIA to the holder which indicates that the person named in it is allowed to stay indefinitely in the UK when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
LIST B
- A passport or travel document endorsed to show that the holder is allowed to stay in the UK and is allowed to do the type of work in question, provided that it does not require the issue of a work permit.
- A Biometric Immigration Document issued by the BIA to the holder which indicates that the person named in it can stay in the UK and is allowed to do the work in question.
- A work permit or other approval to take employment issued by the Home Office or the BIA when produced in combination with either a passport or another travel document endorsed to show the holder is allowed to stay in the UK and is allowed to do the work in question, or a letter issued by the Home Office or the BIA to the holder or the employer or prospective employer confirming the same.
- A certificate of application issued by the Home Office or the BIA to or for a family member of a national of an EEA country or Switzerland stating that the holder is permitted to take employment which is less than 6 months old when produced in combination with evidence of verification by the BIA Employer Checking Service.
- A residence card or document issued by the Home Office or the BIA to a family member of a national of an EEA country or Switzerland.
- An Application Registration Card issued by the Home Office or the BIA stating that the holder is permitted to take employment, when produced in combination with evidence of verification by the BIA Employer Checking Service.
- An Immigration Status Document issued by the Home Office or the BIA to the holder with an endorsement indicating that the person named in it can stay in the UK, and is allowed to do the type of work in question, when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
- A letter issued by the Home Office or the BIA to the holder or the employer or prospective employer, which indicates that the person named in it can stay in the UK and is allowed to do the work in question when produced in combination with an official document giving the person’s permanent NI Number and their name issued by a Government agency or a previous employer.
The new Order also provides in detail the way in which the documents that have been checked must be recorded for evidential purposes. The relevant documents must be checked before the commencement of employment. The employer may not retain the documents for any longer than is necessary to copy the relevant parts of them. The full procedure is as follows:
- the employer takes all reasonable steps to check the validity of the document
- the copy or copies are retained securely by the employer for a period of not less than two years after the employment has come to an end
- if a document contains a photograph, the employer has satisfied himself that the photograph is of the prospective employee or employee
- if a document contains a date of birth, the employer has satisfied himself that the date of birth is consistent with the appearance of the prospective employee or employee
- the employer takes all other reasonable steps to check that the prospective employee or employee is the rightful owner of the document
- if the document is not a passport or other travel document the employer retains a copy of whole of the document in a format which cannot be subsequently altered
- if the document is a passport or other travel document, the following pages of that document are copied in a format which cannot be subsequently altered
- the front cover
- any page containing the holder’s personal details including nationality
- any page containing the holder’s photograph
- any page containing the holder’s signature
- any page containing the date of expiry
- any page containing information indicating the holder has an entitlement to enter or remain in the UK and undertake the work in question.
The BIA’s website has been updated and includes information about the changes. The links are provided below. The guidance and code of practice for employers on avoiding discrimination has been updated and a new draft code of practice on civil penalties for employers has been published.
Further information:
Employers face new fines for illegal working http://www.ind.homeoffice.gov.uk/aboutus/newsarchive/employersfacenewfines
Employing migrant workers http://www.ind.homeoffice.gov.uk/employingmigrants/
Checks for staff employed from 29 February 2008 - new measures to prevent illegal working http://www.ind.homeoffice.gov.uk/lawandpolicy/preventingillegalworking/complyin
gwiththelaw/post280208/
Draft code of practice: Guidance for employers on the avoidance of unlawful discrimination in employment practice while seeking to prevent illegal working http://www.ind.homeoffice.gov.uk/6353/18383/18469/antidiscriminationcode_nov07.pdf
Draft code of practice: Civil penalties for employers http://www.ind.homeoffice.gov.uk/6353/18383/18469/civilpenaltiescode_nov07.pdf
The Immigration (Restrictions on Employment) Order 2007 http://www.opsi.gov.uk/si/si2007/uksi_20073290_en.pdf
Explanatory Memorandum to the Immigration (Restrictions on Employment) Order 2007 http://www.opsi.gov.uk/si/em2007/uksiem_20073290_en.pdf
The latest issue of HMRC’s Notes for Software Developers includes guidance on a number of issues related to mandatory filing of in-year returns from April 2009. In some situations, adjustments to procedures will occur during 2008/09.
P38(S) Student Employees
When a student works for an employer only during holiday periods, the employer need only retain the signed form P38(S) Student Employees. No P14 End of Year Summary need be submitted at the year end (although there is no HMRC objection if one is filed) and no P45 Details of Employee Leaving Work is issued when the student leaves.
To ensure consistent handling of forms P46 Employee Without a Form P45 when they are completed automatically by payroll systems and filed online, some adjustments are being made to the procedures that employers should follow when students continue to work beyond holiday times and when their earnings exceed the tax threshold. A new Employer FAQ is included with this newsletter to explain these changes in context.
P46 Employee Without a Form P45
From April 2008, form P46 must be sent to HMRC if Statement A or B applies and when the first payment to the new employee equals or exceeds the NICS lower earnings limit (instead of when it exceeds the PAYE threshold). If a P46 has been sent to HMRC (resulting in a tax code being applied for the employee), a form P45 must always be completed when the employee leaves, whether or not any tax has been deducted.
However, it is still acceptable for a form P46 to be submitted for all employees, including those whose earnings are below the lower earnings limit.
P45 Details of Employee Leaving Work
Employers should complete a P45 for a leaver on the day that the employee leaves. If that is not possible, it must be sent without “unreasonable delay”. For example, if an employee leaves mid-month and the P45 cannot be produced until the pay run, that is considered to be without “unreasonable delay”.
Where a payroll system requires all of the year-end procedures to be completed before any processing can be done for the new tax year, there may be a delay before a P45 for a leaver in the new tax year can be filed electronically. At the start of the 2008 tax year it will still be acceptable for an employer to send a paper P45 in this situation. However, from April 2009, payroll system developers are expected to have upgraded their systems so that P45s can be filed electronically without any delay.
The new design P45 will be introduced in October 2008 and both the old and the new versions of the form may be used concurrently until the end of the 2008/09 tax year. HMRC will accept old style P45(3) forms for starting dates up to 18 May 2009 if it has a leaving date in the previous employment of before 6 April 2009. All P45s issued to employees from 6 April 2009 must be on the new version form. In addition, if a P45(1) is filed online on or after 6 April 2009 for an employee who left before that date, the P45 issued to the employee must be on the new form. The reason for these requirements is that all P45 online submissions must meet the validations appropriate for 2009/10 and only the new style paper P45 will contain the corresponding information.
The validation rules for online filing during 2008/09 do not allow a P45(1) to be submitted with a leaving date in the next tax year. For example, a P45(1) for an employee leaving in April 2009 could not be filed online in March 2009. A paper P45 should be filed in this situation. A change in the validation rules is likely to be made for the following year.
P46(Pen) Pension Notification
HMRC has advised that the online version of the new P46(Pen) form, currently known as PENNOT, will continue to have that name after the new paper version comes into use.
Duplicate filing of paper and online forms
HMRC has asked payroll software developers to build into their systems suitable methods of deterring or preventing employers from sending in paper versions of forms that have already been filed online, or vice versa.
Payroll deadlines during the next month
December 5 – This is the final day of tax month 8. Tax and NICs etc. for payments made in the tax month to December 5 are due for payment to the Accounts Office by December 19, or by December 22 if paid electronically.
December 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.
December 21 – (December 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 December 19 at the latest.
Payroll FAQ's
Form P38(S) and Student Employees
Special tax provisions are made for students who are employed only during their between-term holidays, including UK nationals who are studying abroad and who return to the UK to work during their holidays. If the student does not produce a P45 and the requirements (as described below) are met, the employer must provide form P38(S) Student Employees for the student to complete and sign. This allows the student to be paid without deduction of income tax, irrespective of the earnings. However, NICs must still be deducted as appropriate.
Where an employer’s circumstances make it more advantageous, e.g. in a business with many sites but a centralised payroll department, the employer may obtain the P38(S) information electronically rather than using the paper form. All of the procedures are otherwise the same. In place of the student’s signed declaration, the employer must be able to demonstrate, in the event of an HMRC audit, that the information originated directly from the student. The procedures described below are written as if it is the paper form that is being used.
The special arrangement for such students is built around the premise that, because they do not work at all during term-time, their earnings in the tax year are unlikely to exceed the personal tax allowance for the year. By not taxing their income, the procedure prevents the need for them to have to claim a tax refund after the end of the year. The arrangement does not imply, however, that students are exempt from tax. If a student’s earnings in the holiday period or periods during the tax year reach the tax threshold, income tax must be deducted from any further earnings without any tax free pay as the full personal tax allowance has already been used up.
Even if a student qualifies to be paid without deduction of tax, NICs must still be calculated if the earnings in any earnings period exceed the LEL. HMRC’s instructions are that code “NI” should be used where NICs are deducted but not income tax. However, computerised payroll systems commonly use tax code “NT” whether or not earnings are such that NICs must be deducted.
The P38(S) procedures may only be applied if there is no intention for the employment continuing outside of the holiday period and the student:
- did not produce a P45 on starting the job
- is attending a college or university and this is named on the form
- is on a course that will continue beyond the end of the current tax year
- has no employment of any kind except during holidays
- has total income from all sources that does not exceed the tax threshold for the year (i.e. £5225 for 2007/08, £5435 for 2008/09).
The arrangement cannot normally be used in the final year of a student’s course because the academic year finishes part way through a tax year.
If a student starts the employment during a holiday period but the intention at that time is for the employment to continue into term-time, the P38(S) procedure may not be used. Normal P46 procedures should be followed.
Where all of the conditions are met
It is the student that signs the declaration and, as a result, the employer is not required to police the student’s circumstances unless it is clear that the declaration is fraudulent. As long as the student works only during holiday periods and the total earnings in the employment do not exceed the tax threshold for year, the employer may continue to use the P38(S) arrangement. However, a number of situations can arise that require the employee to complete a form P46. These situations are explained at the end of this article.
A P38(S) is completed for each tax year during which the conditions can be met. The same form can cover any or all of the holiday periods in the tax year. If a student works in the Easter holiday period and it spans two separate tax years, two P38(S) forms must be completed, one for each tax year.
The P38(S) form changes annually to reflect the current year’s tax threshold and only the latest form should be used. A form produced by the student should never be accepted, other than where the employer provides a secure means by which the student can provide the information electronically.
When the employee leaves at the end of the holiday period, no P45 should be issued.
At the end of the tax year, the employer completes the statement on the back of the P38(S), entering the total pay for the student and the dates of the employment. All P38(S) forms should be retained by the employer for audit purposes for at least three years after the year to which it relates.
There is no statutory requirement to complete a P14 End of Year Summary for an employee for whom the employer holds a P38(S) for the tax year. However, employers with computerised payroll systems normally put students on the payroll so that, even though tax is not deducted, NICs are automatically deducted as appropriate. A P14 produced for a student in these circumstances may be submitted with all other P14s. The P38(S) must still be retained, as above.
Where the conditions cease to be met
Where all of the conditions required to operate P38(S) procedures are initially met for a student but subsequently fail to be met, the employer must used modified P46 procedures. In all of the situations described below, where the student has completed a form P46, a form P45 should be issued when the employment ends.
Earnings exceed the tax threshold. Employers should monitor the earnings paid to students and, where a student’s earnings will exceed the tax threshold at the next payday, the student should be given a form P46 to complete. It should show the date on which the current employment started, not the date on which the tax threshold is exceeded. If the employee ticks
- Statement A or B, tax code 0T on a W1/M1 basis should be operated (not the current emergency tax code)
- Statement C, tax code BR on a W1/M1 basis should be operated.
The tax code used should be entered in the employer’s section of the P46. The employer’s tax office should be informed that tax is being deducted in a P38(S) case. The year-end P14 should include the earnings when the P38(S) procedures were being used and the earnings subsequently.
Employment continues into term-time. As soon as there is agreement for the employment to continue beyond the holiday period, the student should be given a form P46 to complete. It should show the date on which the current employment started, not the date on which term-time working starts. If the employee ticks
- Statement A or B, the emergency tax code on a W1/M1 basis should be operated (in either case)
- Statement C, tax code BR on a W1/M1 basis should be operated.
The year-end P14 should include earnings when the P38(S) procedures were being used and the earnings subsequently.
Employment ends and resumes later in term-time. If a student leaves at the end of the holiday period but returns to work during term-time after a break, the student should be given a form P46 to complete. It should show the date on which the new employment started. If the employee ticks
- Statement A (strictly incorrect) or Statement B, the emergency tax code on a W1/M1 basis should be operated (in either case)
- Statement C, tax code BR on a cumulative basis should be operated, on the earnings in the new employment only.
The employer is asked if possible to submit a year-end P14 for each period of employment.
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