HMRC agree much requested simplification to the year end process

18 December 2014

HMRC are proposing a revision to secondary legislation that should significantly lighten the load for Payroll Bureaux and Agents and Employers alike at the tax year end.

The proposed revision looks to amend PAYE regulations so as to remove mandation for completing the “seven questions” checklist when making the final Full Payment Submission. This change is expected to take effect from 6 March 2015, and should thus avoid the need to complete this checklist for the tax year 2014-15. HMRC have said that from 6 March 2015 they will accept a final FPS or EPS for 2014-15 and 2015-16 with or without a completed checklist (software data items 111 to 117). Employers should still report the Final Submission for Year indicator (data item 109).

However HMRC recognise that some software developers may not be able to make the necessary amendments to their end of year products in time for the final 2014-15 submissions. HMRC advise that “In cases where employers do have to complete the checklist in order to make their final submission, they should ensure that they complete it accurately. We will remove these checklist items from our Basic PAYE Tools as soon as possible. Please note that this will probably not be until July 2015.”

HMRC have also emphasised that “the removal of the checklist does not affect an employer’s obligation to report on time:

  • all expenses and benefits provided on forms P11D and P9D
  • the amount of Class 1A National Insurance due on all the expenses and benefits provided on form P11D(B).

Where no benefits have been paid during 2014-15 and a form P11D(B) or P11D(B) reminder is received, employers can either:

  • submit a 'nil' return
  • complete the ‘2014-15 Employer- No return of Class 1A’ form

to advise us that they have no P11D to submit and no Class 1A return to make. The online ‘no return to make’ form will be available from 6 April 2015.”

HMRC also ask all employers and their agents or bureaux to note that the penalty consequences where employers fail to make a PAYE report – including the final one of a tax year - by the relevant reporting date remain unchanged.

Confirmation of the proposed change in the law comes in the revised RTI Tax information and Impact Note (TiiN) RTI: Improving the operation of PAYE , which explains that since the last version of the TiiN was published in March 2013 HMRC have worked with external stakeholders to better understand how RTI changes have affected business.

CIPP comment

The CIPP welcomes this reduction in admin burdens for employers and agents alike. Many CIPP members and members of the former ECF, now EPG, have requested that the questions on the final FPS be looked at. This was one of the biggest areas of contention as many believed the cost model showed a reduction in end of year processes and yet the “P35 questions” seemed to remain. Removing the requirement to submit this information at year end will significantly reduce burdens on employers but will most definitely reduce burdens on agents and bureaux, and make a busy time of the year just a little less frantic by removing the mandatory need for the employer (client) to provide confirmation to the answers to seven questions.

We acknowledge this to be a positive step forward in bringing about improvements to employer and business processes via RTI and very much hope that most Software Developers will be able to bring about adjustments in time to include for the 2014-15 tax year and thus minimise unnecessary work or confusion.