Draft Regulations - Mandatory Electronic Filing For Large And Medium Sized Employers, Incentives For Small Employers
The Inland Revenue has today published draft regulations that provide for mandatory electronic filing of employers' end of year returns (PDF file 112K) and incentives (PDF file 111K) to encourage small employers to adopt electronic filing.
Comments on these
draft regulations
should be sent,
by 7 July 2003,
to:
Chris Davis
Revenue Policy,
Cross Cutting
Policy
S23 West Wing
Somerset House
London
WC2B 6ES
email: chris.davis@ir.gsi.gov.uk
Please mark your
email "consultation
on draft e-filing
regulations"
Your comments
may be made public
unless you indicate
that you would
prefer them to
remain confidential.
The final version of the regulations will be made in September 2003
Background
In April 2002,
the Chancellor
announced that
employers with
250 or more employees
will be required
to send their
2004/05, and subsequent,
end of year returns
electronically.
Employers with
50 to 249 employees
will be required
to send their
end of year returns
electronically
for 2005/06 and
later years.
Small employers with fewer than 50 employees will be required to send their end of year returns electronically from 2009/10. In the meantime, those small employers who choose to send in their returns electronically, directly or via a payroll intermediary, will receive an incentive payment, each year between 2005 and 2009, for doing so.
Regulatory
Impact Assessment
A partial
regulatory impact
assessment
(PDF 25K) covering
these measures
was published
in April 2002.
Comments on that
assessment are
welcome and should
be sent to:
Ian Atkin
Revenue Policy,
Employer Initiatives
4th Floor, South
West Bush House
Strand
London WC2B 4RD
e-mail ian.atkin@ir.gsi.gov.uk
NICs, Student
Loan Repayments,
Tax Credits and
Statutory Payments
The draft Income
Tax (Employments)
(Amendment) Regulations
2003 provide for
mandatory electronic
communication
of tax information
contained in the
employer's end
of year return
(forms P35 and
P14). When these
draft regulation
have been finalised
parallel regulations
will be made under
the Social Security
and Education
Acts to replicate
the tax provisions
for the other
information required
on forms P35 and
P14. The only
anticipated difference
in the provisions
is that the regulations
made under the
Social Security
and Education
Acts will not
impose a penalty
for failure to
comply with those
regulations where
a penalty is charged
under these regulations.
Board's Directions
The draft regulations
provide for the
Board of Inland
Revenue to make
directions about
- "the specified date" on which the number of employees working for an employer will be counted (draft regulation 46ZD of the PAYE amendment regulations and draft regulation 1 of the incentive regulations),
- "the standards of accuracy and completeness" that an electronic return must satisfy (draft regulation 46ZF of the PAYE amendment regulations and draft regulation 4 of the incentive regulations), and
- the methods of electronic communication authorised for delivering the return (draft regulation 46ZG of the PAYE amendment regulations and draft regulation 4 of the incentive regulations).
We expect that for 2004/05 returns the Board will direct that
- The specified date will be in the autumn of 2003. We will give a clearer idea of the likely date in the next few weeks and this note will be updated then.
- The standards
of accuracy
and completeness
will be those
set out in the
"Quality
Standard Validation
Specification
from April 2004"
(PDF 563K).
These standards
will be built
into the validation
of electronic
returns. Returns
that do not
meet the standard
will be rejected.
- The authorised methods of electronic communication will be the Internet service for PAYE and EDI.
Electronic
payment
In Budget 2003,
it was announced
that large employers
(those with 250
or more employees)
will be required
to pay electronically
from April 2004.
At the same time
the Inland Revenue
will introduce
a later due date
for electronic
payments made
by all employers.
This will compensate
for the loss of
cash flow advantage
offered by cheque
payment. It will
also encourage
smaller employers
to adopt e-payment
voluntarily. The
draft regulations
for these measures
will be published
in June.
Interaction
with the Rewrite
of the PAYE Regulations
The Income Tax
(Employments)
(Amendment) Regulations
2003 will amend
the current PAYE
regulations (SI
1993/744). The
Tax Law Rewrite
project are rewriting
those regulations
and their latest
draft will be
published later
this week. That
draft does not
include the provisions
for mandatory
electronic filing
(or electronic
payment), but
they will be included,
rewritten as necessary,
in the final version
of the new PAYE
regulations when
they are made
later this year.
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