Looking ahead to April 2014 - reporting the use of relaxation for Micro employers

09 January 2014

We reported in December 2013 about the relaxation that will run from April 2014 until 2016 for micro employers who are still struggling to update their processes for RTI.

As the 2014-15 tax year will see the beginning of automatic penalties for late filing or non-filing in real time there would need to be, as you would expect, a system for accounting for times where an employer might be late in reporting PAYE information under RTI. HMRC had previously issued to software developers detail about the options available for reporting these cases - often referred to as data item 154.

As you might imagine, with news of the relaxation coming through in December there were questions as to how this relaxation would be accounted for within a previously declared and detailed data item 154.

Guidance has now been issued to software developers on the list of options and reasons for late reporting under data item 154 and the list now reads as follows:

  • Value A: Notional payment: Payment to Expat by third party or overseas employer
  • Value B: Notional payment: Employment related security
  • Value C: Notional payment: Other
  • Value D: Payment subject to Class 1 NICs but P11D/P9D for tax
  • Value E: Micro Employer using temporary "on or before" relaxation
  • Value F: No working sheet required; Impractical to report
  • Value G: Reasonable excuse
  • Value H: Correction to earlier submission.

The original list saw the reasons given in value F being split across both E & F, however for the Micro employer taking advantage of the relaxation, value E will be need to be selected when prompted within their software.

At this stage and in all likelihood your software developer may well have already designed their solutions for 2014-15 and this change may well require further updates. Be aware of this notification but no action will be needed by you at this stage as your software provider will contact you as and when they have updates to notify you of.

The aim of these options is to reduce the risk of incorrect notices or penalties being produced by HMRC and the CIPP continues to work alongside other stakeholders and with HMRC on the problems being experienced now. The CIPP continues to lobby for a delay in the penalty regime.

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