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News Items – at 29th April 2008
This is not a good week for HMRC – announcements about two fundamental errors in guidance provided for employers and an apology for confusing wording on the P35 Annual Return. If you use the P11 Calculator provided on the latest Employer CD-ROM or you use Helpbook E16 to handle adoption rights, do check out the news items.
It is unfortunate that HMRC has also chosen this week to announce that it has commissioned research to evaluate the range of support service and guidance that it provides for employers and tax practitioners.
May is a key month for payroll year-end reporting and the deadline dates for the whole month are included in this week’s newsletter. Remember that May 26, the “drop-dead” filing deadline, is a Bank Holiday this year.
This week’s Employer FAQ considers the obligations of employers towards employee who are members of the Reserve Forces.
Current updates
HMRC has issued a warning to employers using the P11 Calculator on its latest CD-ROM concerning the calculation of student loan deductions. The calculations are using the employee’s gross pay for tax instead of gross pay for NICs and, where these are different, the student loan deduction will be lower than it should be. The situation arises where the employer is reducing the gross pay for tax under the net pay arrangement, e.g. in respect of contributions to an occupational pension scheme or to a payroll giving scheme.
HMRC believes that few employers using the P11 Calculator will be affected by the problem and, if the situation exists, employers should contact the Online Services Helpdesk for further advice on 0845 60 55 999.
Further information:
In-year Employer CD-ROM updates - internet downloads http://www.hmrc.gov.uk/employers/cdrom/download-update.htm
HMRC has also warned employers that the “latest employment start dates” shown on page 48 of the Employer Helpbook E16 Pay and time off work for adoptive parents are incorrect. The dates are transposed by one week and show a latest start date that is a week earlier than it should be.
The printed version of the booklet and the version included on the Employer CD-ROM are incorrect. A corrected version can be downloaded from http://www.hmrc.gov.uk/helpsheets/e16.pdf.
HMRC has apologised for the confusion caused for many employers over the wording of Question 6 in the Part 3 Checklist of the P35 Employer Annual Return. The wording of this question seems to change every year as a result of continuous changes to the Service Company and IR35 legislation.
For those employers who have not yet filed their P35, HMRC provides the following clarification:
“Question 6 is deliberately in two parts. The first question narrows those employers who need to consider whether the second question applies. If the answer to the first question is no, the answer to the second question will similarly be no.
The term service company relates to limited companies, limited liability partnerships and general partnerships within the range of the Intermediaries legislation (IR35) or the Managed Service Company legislation (Chapters 8 or 9 ITEPA, respectively).
The first question should be answered yes if:
- an individual personally performs services for a client and the services are provided not under a contract directly between the client and the worker but under arrangements involving the limited company, limited liability partnership or general partnership (the service company)
- the limited company, limited liability partnership or general partnership’s (the service company) business consists wholly or mainly of providing the services of individuals to clients
The second question should only be answered yes if income has been treated as deemed employment income and PAYE (Pay As You Earn)/National Insurance (NI) deducted in accordance with the Managed Service Company or Intermediaries legislation(IR35).”
Employers who have already filed their P35 and believe that they have answered the question incorrectly do not need to amend their Return. HMRC (quote) “will not use the answers to Question 6 on the 2007-08 P35 to risk profile individual employers for a compliance review.”
Further information:
2007-08 P35: Question 6 – meaning of service company http://www.hmrc.gov.uk/employers/2007-08-P35-Quest-6.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 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.
May 19 – 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 20 at the latest.
May 26 – The date after which non-receipt by the HMRC of year-end returns P14s, P35 and P38A will automatically result in late-filing penalties.
May 31 – This is the deadline for issuing P60s to qualifying employees.
Payroll FAQ's
Reservists are part-time members of the Armed Forces, or ex-members of the Regular Forces with a reserve liability, who are able to boost the capability of Regular Units during military operations. There are around 40,000 Volunteer Reservists in the UK and they form some 25% of the UK’s total defence capacity.
Employers should be aware of any employees who are Reservists. Since 2004, the Ministry of Defence requires the Commanding Officer of the new Reservist’s Unit to write to the employer to explain what membership of the Reserve Forces involves. In addition, where it is a condition of employment that employees notify their employer if they take a second job, an employee who becomes a Reservist must view their Reserve Forces membership as a second or part-time job.
Reservists are required to undertake training throughout the year and they learn skills, many of which are transferable to civilian workplace, that many organisations do not have money or time to provide. The average Reservist receives training in skills that would cost an employer over £9,000 per year to provide. Much of the training includes nationally recognised qualifications. Among the skills gained by Reservists, depending on the Service and Unit to which they belong, are
- advanced communications using computer, radio and satellite technology
- language skills for intelligence and administrative operations
- handling explosives, dangerous chemicals or waste
- operating heavy goods vehicles or motorcycles
- driving heavy goods vehicles or motorcycles
- catering.
The training provided for most Reservists takes three forms:
- weekly training - most Reservists attend training at their local centre for about 2½ hours each week on an evening
- weekend training - all Reservists are expected to attend a number of training weekends which are spread out throughout the year.
- continuous training period - once a year, there is a 15-day continuous training period that is sometimes known as “Annual Camp”. This may take the form of a course at a training establishment, an attachment to a Regular Unit, a training exercise or a combination of these elements. Each year, some Reservists train overseas.
Some Reservists volunteer for extra training courses and other duties in addition to their annual continuous training period. This training focuses on skills such as health and safety, IT and personnel management.
The Annual Camp is often the one time in the year when the Reservist’s Unit can train together. The dates are determined as early as possible in order to help Reservists arrange time off work. There is no statutory requirement on employers to provide additional time off for a Reservist’s annual continuous training period, either paid or unpaid. Some employers require Reservists to take the time from their annual holiday entitlement. However, in view of the transferable skills that are gained from this training, the Ministry of Defence encourages employers to consider providing extra leave, paid or unpaid, for the continuous training period.
Further information for employers is available at www.sabre.mod.uk/output/Page5.asp.
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