Margaret Knights - HMRC (Chair)
Norman Green - BCS
Maria Hennessey - IREEN
Matthew Brown - CIOT
Yvette Lamidey - IPP
John Rutherford - BASDA
Jackie Petherbridge -PSPG
Elaine Gibson - IPP
Ken Voller - ICAEW
Linda Pullan - Payroll Alliance
Josie Skipp - HMRC
Pam Barber - HMRC
Colin Henzell - HMRC
Simon Lidster - HMRC
Alyson Fairbrass - HMRC
Pam Jones - HMRC
Adrian Ditum - HMRC
Connie Hera - HMRC
Sue Manley - HMRC
Matthew Reid - HMRC (Minutes)
The chair opened the meeting.
The minutes of the previous meeting on 4 April 2007 were discussed.
In respect of the previous minutes, a member commented that he represented only the British Computer Society (BCS), and not his employer.
Another commented that at point 10 in the last minutes she was referring
to National Insurance bills, rather than NI deficiency notices
The outstanding action points from the previous meeting are:
An updated version of the PAYE scenarios paper (Appendix 1) was presented and it was confirmed that it was intended to get ‘Live Services’ to include them within HMRC guidance, although the format would obviously need to be more streamlined.
A representative commented that when an employee provides more than one P45
(3), the P45 (3) with the latest date should be used, rather than one with
the highest earnings as the paper states. HMRC stated that the tax code should
then also be applied on a week 1/month 1 basis. HMRC confirmed that the guidance
in the paper had been verified with HMRC’s technical expert, but that
they would look at these amendments and then get the scenarios published without
any further reference to the MPPC sub-group.
A draft of Payroll Standards (Appendices 2 and 3) was presented on behalf of HMRC to obtain feedback for the core Payroll Standards tests. Feedback was requested so that all views could be taken into consideration. It was confirmed that the documents would be sent out to external sub-group members by e-mail later that day.
A representative asked whether the proposed Payroll Standards had been trialled by any employers – there was confirmation from a member that they had not been. HMRC asked whether any interest had been expressed by small employers in trialling the draft payroll standards – there was confirmation from HMRC that there had been no expression of interest. Member’s asked whether there were any deadlines on feedback. A HMRC representative confirmed that there were not - as the Payroll Standards are set annually ongoing feedback was welcome.
Members were asked when all HMRC-accredited products would be capable of filing in-year forms online. Members suggested that this would need to be after the mandatory date for in-year online filing for small employers, which is April 2011. HMRC noted member’s views and agreed to report back to the relevant team within HMRC. A member disagreed with this and said that it would be misleading to employers -it should be pointed out on products whether they are suitable for large and medium-sized employers, or small employers. HMRC commented that this was not part of the payroll standard, so it should not be a block to HMRC accreditation. A member’s comment was added that if small employers wished to purchase a product it was a commercial decision for them, and that it was not an issue for HMRC until 2010-11. The point was reiterated that this would be misleading for employers, and HMRC commented that it would render accreditation useless. It was emphasised that barriers should not be put in the way of products that were suitable for use, and that products currently only have to say which forms they support. HMRC expressed the opinion that this did not need to change.
A HMRC representative stated that at some stage before the in-year ‘go-live’
date for small employers of April 2011, HMRC accreditation would need to take
into account the changes to give small employers a chance to get used to them.
HMRC cited October 2010 as a possible release date for this. A representative
stated that this would mean that products would not be available in time.
HMRC commented that it had previously been agreed this should happen at least
12 months ahead of the release date. They then stated that the only concern
was that small employers were enabled by the products that were available
at the time. HMRC added that it was not just ‘a commercial decision’,
and that was the reason for payroll standards being introduced. HMRC agreed
that the changes should not be brought in too early, but suggested that ‘some
time’ ahead of the changes in April 2011 would be a good compromise,
as had been suggested by members. A member commented that while HMRC were
able to publicise the changes as widely as possible, understanding and adopting
the changes were the responsibility of the employers concerned.
HMRC will take away these comments to consider and provide feedback to the
sub-group in due course.
Action point 1. HMRC invited anyone who had any further
comments to send them to the group secretary.
A presentation was given on behalf of the MPPC Business Change Team. This outlined the internal HMRC changes that had already been made, as well as the changes that were due to be introduced in October 2007 and April 2008.
From the first slide (P14 consolidation), HMRC commented that the lack of manual intervention would increase the accuracy of the work completed and should reduce the number of cases requiring manual intervention by approximately 2 million p.a.
In respect of auto coding of P11D Benefit in Kind information a representative
asked whether arrears of tax would be collected by the automatic coding. HMRC
confirmed that the automatic coding changes only updated the current year
taxable benefit details in each individual’s tax code and did not at
this stage include the automatic coding of a CY-I underpayment arising from
Benefits in Kind. A member asked about the accuracy of automatic coding if
there had been a change in benefits during the year, in particular a change
to a company car after the end of the financial year. HMRC agreed to investigate
and provide feedback to the sub-group.
Action point 2. A member asked whether benefits such as subscriptions to professional bodies that were covered by a dispensation will now be included in tax codes. Again, HMRC confirmed they would investigate and provide feedback.
Action point 3. HMRC stated that guidance on the issue of
taxing benefits via payroll had been clarified to staff within HMRC.
A member asked whether this meant that the mandatory online filing of P11Ds by employers would be introduced. HMRC confirmed that there were no current plans.
On the third slide (‘the database structure’) an HMRC representative commented that the current infrastructure was too inflexible for HMRC’s workforce, and that the change to a single database would introduce an enhanced service to customers as a result of the flexibility it would bring.
Regarding auto coding of P11D data, concern was expressed about employers’ ability to cope with the updating of tax codes that the changes will bring – they are used to waiting for the manual updates that come later in the year from HMRC – and the number of week 1/month 1 tax codes that would be generated. A member disagreed with this and commented that the number of tax code updates would remain the same anyway. A number of representatives did not think that employers would be affected. It was confirmed that the internal changes had not been published on the Internet and asked whether anyone thought this was necessary. Members confirmed that they were more concerned about the automated process over-riding any correct manual intervention that had already been made by HMRC staff and added that HMRC need to confirm the outcome internally (covered by action point 4).
HMRC stated that all of the points raised would need to be addressed with the HMRC experts, and it was confirmed that a representative from Business Change Team would be at each MPPC sub-group meeting to address such issues in future.
The Chair reiterated that HMRC needed help from the sub-group members to ensure that all avenues of communication were covered. Feedback was invited from anyone who thought something was missing from the communications strategy.
The communications item on the agenda was brought forward and HMRC presented a draft internet article about the internal HMRC changes and asked for feedback on this. HMRC confirmed that this would be sent out to all members by e-mail after the meeting.
A member asked about any communications that were planned for the individual customer audience. Representatives agreed that whereas HMRC had established good communication links with employers, there was no easy communication channel to individuals. Any suggestions from the group were invited for this. A member suggested notes be put on payslips by employers; examples of where this has already happened on other issues. It was also suggested by representatives that HMRC put a note on any P2 issued. A further suggestion that posters aimed at individuals could be included with future editions of 'Employer Bulletin', which would enable employers to put them on notice boards at the workplace (and that extra copies should be made available for downloading on the internet). A representative also suggested that issues should be introduced into a popular TV soap.
Reference was made to the Carter update paper and the penalties paper that had been discussed at the previous meeting on 4 April 2007. HMRC said that the warning letter issued when the first paper P45/P46 is processed will enable employers to take the relevant action to prevent a recurrence. There was confirmation that penalties levied on employers for failure to file in - year forms online would not actually be enforced until 6 January 2010. HMRC also confirmed that the draft regulations show the initial penalties as ‘nil’ for the first 5 offences. HMRC was still considering its options for when the new P45 could be delivered. The P46 (PEN) would not be introduced until April 2009.
HMRC confirmed that the changes would have an impact on its infrastructure, so contingency plans had to be considered and that there were still cases that would need manual intervention by HMRC staff, including when the NI number, date of birth or gender were missing on a submission. HMRC stated that some customer groups often have the new mandatory information missing from their payroll records (NI number, date of birth). A member agreed that the changes would be an inconvenience to pension providers.
A member asked whether the introduction of the Carter recommendations could be delayed further. It was stated that this was not the case, but that the detailed analysis of the deferral of the Carter proposals explained the delay in the details being published in the ‘Notes for Software Developers’ – HMRC had to be certain of the way forward before they are published.
A member asked whether HMRC had concerns about employers not being ready
for Carter implementation and also suggested that HMRC compliance staff may
be better placed in a proactive role, assisting employers to become ready
for the changes. HMRC confirmed that this suggestion would be taken forward.
A member acknowledged that small employers had more of a problem, but also
concluded that implementation was easier for them to resolve in comparison
to large and medium sized employers. Another member disagreed and said that
it was not easier for small employers to implement the changes as many took
less notice of HMRC literature. A member then stated that there was only so
much HMRC could do about this and that it had to be understood that the responsibility
was on employers to familiarise themselves and implement the changes that
had been published by HMRC.
There had been several suggestions from members about reminders to employers about the new mandatory fields:
Action point. HMRC to take forward
HMRC to take forward changes.
Action point. HMRC to take forward
A representative advised that the HMRC employer recruitment activity during 2007-2008 would concentrate on small employers. It was confirmed that there were approximately 150’000 small employers with 5 or more employees who had not claimed the tax-free incentive for early on-line filing and that they were a target audience this year.
HMRC stated that there would be more employer presentations this year, which had been reduced to quicker 30 minute sessions for small employers. HMRC confirmed that they would be delivered by registration surgeries, breakfast meetings and ‘drop in’ surgeries at approximately 40 HMRC enquiry centres nationwide and also stated that they were hoping to commission the ‘old’ mobile enquiry centres with internet access for small employers to make accessibility easier. A member confirmed that if they provided them with the dates for the ‘road shows’ that they would be able to publicise them.
Action point 5
HMRC confirmed that the intention was for the employer recruiters to be more pro-active with this audience than before and stated the methods used and the approach would be evaluated after 6 months.
A representative suggested that a faster process was needed in obtaining a PIN when employers register, so that small employers were not deterred by this. A member suggested that this was completed by e-mail. Representatives commented that this may not be possible because of security reasons, but it was agreed by HMRC that this issue should be taken away for consideration and feedback would be provided at the next meeting.
Action point 6
A member stated that they felt that one of the major reasons for employer recruitment failure was the lack of interest in online filing by small accountants, which resulted in the small employers they represent not becoming aware of it. HMRC confirmed that they had put a lot of work into road shows held nationally, and that these were now specifically aimed at smaller accountants not represented at the ‘Working Together’ forum. A representative asked members whether they could help address the issue. In response it was said by members that they would continue to promote the issue through the tax faculty. A member confirmed that they had come across accountants who were still unaware of the filing incentives. A member stated that feedback had showed that accountants in the main were making use of the incentives but agreed that there were still accountants and employers who were unaware of the issue. Another member stated that in some circumstances the payroll was not the responsibility of the accountant and this could be the reason for their lack of interest.
A member stated that the validation specifications had been open to interpretation in the past, but that HMRC was taking a new approach and now had a single central repository for error types. HMRC explained that more quality assurance of the rules meant that employers would benefit as this would be clearer and that all output would now be from one central system and that the technical pack with the details setting out the new rules should become available in July.
A representative said the machine readable rules would be from the ‘desktop’ checker and that these should also be published in July. HMRC confirmed that this would be ‘dropped’ into both TPVS and the live service at the same time so that they reflect exactly the same things and that they would both be centrally updated. HMRC also confirmed that TPVS would be aligned with the live service this year as had been requested. HMRC confirmed that they had made a significant investment to ensure that TPVS and the live service were the same.
Action Point 8
7.3 Error messages
HMRC stated that the draft error message paper (appendix 6) showed how the revised numbering may go. They also confirmed that although they were still awaiting the completed list from its IT architects the full list would be circulated as soon as it was available so that it could be sent to the sub-group for consultation.
Action Point 9
A member asked whether all errors would be identified by the new list. HMRC confirmed that the system could deal with 8000 as a maximum so that all types of error cases can be rejected was given.
HMRC advised that we would need to ensure that these were built into HMRC guidance for help lines.
Action Point 10
A member asked whether the system could have warning messages built in about the required NI number, date of birth and gender fields. A representative of HMRC said this would need to be considered.
HMRC said they had been looking at the advantages and the disadvantages to
a ‘test in live’ service following the feedback received at the
sub-group meeting on 4 April.
HMRC confirmed that after consideration it was their belief that the service
was worthwhile. They advised that they hoped to bring forward the ‘test
in live’ message format, as it manages HMRC and Aspire risks.
However a representative admitted that there was evidence of customer confusion with ‘test in live’, so HMRC agreed to explore providing a Developers – live service
Reiteration of their point from the last meeting that the representatives did not see the point in having test in live was made. A representative also commented that test in live shows customers that the system works and is also worthwhile from software developers and HMRC’s perspective. It was stated that many employers wanted it as reassurance while they were getting used to a new way of submitting forms online and added that if it was not a permanent feature software developers would install it properly to begin with. It was said that as TPVS and test in live would now be much closer than they were, there was much less risk than had already been experienced with end of year filing.
HMRC gave confirmation that they would take away the test in live issue to see whether it could be introduced before April 2008 and whether it could be subsequently switched off.
Action point 11
It was advised by HMRC that most communication issues had been covered under paragraph 4.
It was confirmed that the Online Filing Handbook had now been renamed the Guide to filing PAYE forms online and paying electronically (the guide) and that it was now available online. HMRC had received the suggestion that a shorter version was produced for use when submitting in year forms on line only. Confirmation was given that HMRC would work on this and draft something for the next sub group meeting.
Action point 12
A representative thanked everyone for their contributions to the draft media articles and confirmed that these would now be published.
A representative said that since the last sub group meeting the MPPC Communications
team had concentrated on internal communications due to the HMRC infrastructure
changes.
HMRC advised that internal guidance was about to be published on the subject of local practices and reaffirmed that local practices did not fit with online services needed to be stopped. HMRC also advised that visits had been made to several large processing offices about this, which had not highlighted any local practices that had not already been identified. HMRC confirmed that the Business Change Team were making visits to other local offices about this and that this should be complete by the end of May.
A member asked whether the local practises paper had been fed through to agents as they believed that they often continued local practices. The group agreed that it should be taken forward after the meeting.
A draft version of the new stationery was presented and feedback on these versions was requested.
The initial comments made were:-
The next meeting will be held on Tuesday 10 July 2007.
