Employer Consultation Sub-Group meeting - Minutes

6 December 2006

Attendees

MKn - Margaret Knights (Chair)
MB - Matthew Brown (CIOT)
PF - Peter Fielder
EG - Elaine Gibson (IPP)
NG - Norman Green (LogicaCMG, BCS)
CH - Chris Hind (BCC)
PJ - Paul Jackson (Payroll Alliance)
MKs - Martin Kinsella LL - Luke Liddiard
TL - Tracey Lockyer (Minutes)
PN - Pooja Nayyar
CP - Carolyn Parmeter
RT - Robert Tomlinson
KV - Ken Voller (ICAEW)
JW - Jo Wakeman
AW - Alison Wells

Previous minutes

The previous minutes were agreed.

Previous Action Points

From 15 September 2006

AP2 - Review of TUPE and Bulk Transfers is ongoing. Workshop on 8 December to pursue.
AP4 - Payroll Standard has problem areas. Meeting with Tony Birch in December to discuss.
AP5 - Closed. Extension of 42-day period covered in Penalties paper.
AP7 - Jackie Petherbridge is still waiting for a response from FSB.
AP8 - Aspire put workaround in place to solve problem with batches of movement forms that include week 1 or month 1. The process can put them through to COP but Aspire are waiting for go-ahead from PAYE process team.

From 7 November 2006

AP1 - Closed. DPS webpage updated, reminder ‘postcard’ sent to Employer Bulletin customers from 4 December and text supplied for February 2007 edition of EB.
AP2 - Ongoing.
AP3 - Still too early to decide the use of options and menus on the helpline.
AP4 - Closed.
AP5 - Closed. Information published in Notes for Payroll Software Developers.
AP6 - Closed.
AP7 - Closed. Links on gateway checked - no problems found.
AP8 - Closed. Pam Jones updated CH under separate comms.

Carter Programme update

JW outlined the Carter Programme and referred to her update paper Implementing Lord Carter’s recommendations for improving HMRC online services (attached).

JW advised that the focus is on working with customers to help design the way forward. She stressed the importance of investing in IT to ensure robust online services which are fit for purpose.

NG asked whether build and test should be to October 2007 not April 2008, as penalties are expected from then. KV asked for a year’s grace for penalties after build and test as Carter suggested testing for one year. JW advised there would be comprehensive testing at each stage to ensure a robust IT system for April 2008.
CP advised that IT and Aspire will adhere to Carter recommendations and have a more rigorous testing schedule because of the year end problems with 2004-05.

KV asked if there was a similar table to page 1 for in-year filing to date. JW will take forward.

AP1 - JW to find out if there is a table to show in-year returns received 2002 to date.

Local practices

MKn consulted with the Umbrella Sub-Group for agreement to proposals on her paper Local Practices and a Suggested Way Forward (attached).

  • Code BR and P46 process. Suggestion for employers to send P46 with no signature to reduce the number of employees on code BR. EG asked about compliance. CP advised that employee must still provide details to new employer, which would be kept internally by HR. Agreed.
  • New pensioners. Suggestion to produce new form P46(Pensioner) to merge information from PENNOT, P46 and P160. P46(Pensioner) would only be used by pension providers. Agreed.
  • P46 submitted by EDI. Suggestion to change EDI routine from April 2008 so that employers can only send a ‘complete’ P46 ie when they make their first payment to the employee. Agreed.
  • Timings of P46. Suggestion for HMRC to send slightly more Notice of Coding forms (P6) when there is any doubt of the code being send so that the employer can use accurate codes quicker. NG advised that employers may incur extra costs via EDI, but this outweighs their P45 & P46 correspondence. CH agreed suggestion is sensible. Agreed.
  • P46 followed by P45(3). From April 2008, IT will be able to receive more than one piece of starter information so that one form overrides another. CH asked about correct P45 turning up for example 18 months later. MKn advised that these items would end up on an internal worklist. Agreed.
  • P46 when earnings reach LEL. Suggestion for employer to provide P46 when earnings reach Lower Earnings Limit (LEL) rather than the current amount of Earnings Threshold (single Personal Allowance). Agreed.
  • P46 requirement. HMRC to update Regulation 49 to define ‘complete’ so that employers send all completed P46s to HMRC. Agreed.
  • Form P38A. Many employers don’t use form P38A. HMRC would like all employers to keep the same records for everyone and reduce the likelihood of employers incurring a penalty if they have not submitted starter details before sending information on the P14. Agreed.
  • Tax code NI. Employers are using the informal tax code NI for students. This is not a valid code. HMRC will update the Online Filing Handbook with new guidance. Agreed.
  • Payment after date of leaving. HMRC cannot update IT to capture information for April 2008 so this will have to remain a manual input. In the meantime, HMRC will update guidance in the Online Filing Handbook. Agreed.
  • Flat rate expenses. Some local agreements allow employers to change the tax code but this means that some employees go from one job to another and get more than one flat rate expense for the year. Suggestion to make greater use of the field on P45(3) and P46 for ‘tax code operated’ to signify tax code and expenses allowance. CH asked about variations on tax codes, and the codes not being specific ie non-specific.

AP2 - MKn to find out about variations on tax codes and the use of non-specific codes.

  • Date of birth on P45 and P46. Suggestion to add ‘date of birth’ field on P45 and P46 so that where the NINO is wrong, this will help to match the employee as all information will be held on NIRS. KV asked if date of birth request goes against Age Discrimination Act. Discussion around individual employees refusing to provide the information eg actors. Agreed.
  • Tax code NT. Suggestion for HMRC to send all coding notices on form P6 and issue the date electronically. Agreed with a request that the change also incorporates code X.
  • Works number update. HMRC will only accept works number changes from employers not employees in the future. Agreed.
  • Employees who leave and restart with same employer. HMRC to update Online Filing Handbook with guidance to help employers know what to do in certain circumstances. Agreed.

In-year filing penalties

MKs consulted with the Umbrella Sub-Group on the updates to his paper Proposals for changes to the existing failure penalty and the introduction of a new online filing penalty (attached). MKs had highlighted the new or amended text so only addressed those points.

  • Validations published in Notes for Payroll Software Developers.
  • Discussed new information on rejections.
  • Online filing penalty. Suggestion for quarterly penalty notices to be June, September, December and March as they did not conflict with other busy times. NG asked if voluntary online filers (small employers) would also receive the penalty. MKs confirmed they would not.
  • 42-day period has now been extended to 62 days. KV asked about 91-day period which had previously been discussed. MKs advised that discussions suggested that 91 days was too long.
  • Penalties will apply to all employers that fail to file within 62 days irrespective of size or religious status.
  • Penalties will apply where employers create records using P14s instead of a P46.
  • Error messages will contain sufficient detail so that it is specific and can help the user to correct the information online. CH suggested using ‘given name’ and ‘family name’ instead of ‘Christian name’ and ‘surname’.
  • Specific arrangements are in place to address TUPE, mergers and acquisitions and, as per AP2 (15 Sept) above, a meeting on 8 December will discuss ongoing issues. EG requested they consider the bulk issue of P45s.
  • New definition for ‘date employment started’ on P46 was discussed. KV suggested it should be included in P46 data. CP asked about a steer on ‘date of leaving’. CH and KV quoted scenarios where the starting date may be difficult to identify - for example, a director may not take payment until year end so the employment start date and first date of payment will not be the same, or someone signs on at an agency but doesn’t have any work or pay until months later. MKs advised that ‘reasonable excuses’ will be available so no penalty would arise.

AP3 - MKs to check if we need a clear steer on the definition of ‘date of leaving’.

MPPC Communications

TL advised that the Communications Team has:

  • produced text for Notes for Payroll Software Developers (published on 8 December) to remind software developers to make sure their payroll products are capable of submitting in-year data online by April 2008
  • provided guidance for the February 2007 edition of Employer Bulletin to encourage employers to think about PAYE in-year, review how their payroll is run and check their software
  • prepared internet messages about how Phase 2 changes will affect employers and agents.

AOB

CP advised that JW had left a paper about functionality for the members to collect.

MKn thanked the Sub-Group for their time and continued support throughout 2006.

MKn advised the date of the next meeting will be at the end of February 2007. We will confirm the date shortly.