PAYE26010 - employer records: magnetic media: magnetic media: coding

This subject is presented as follows

Background

Magnetic Media Scheme

Annual, Supplementary and Budget code changes on cartridge

Data Centres

Effect of employer entering scheme

Changes affecting an employer record

Amended notices by batch process

Background

Many employers have computerised payrolls or may have a payroll agent or bureau that operates PAYE for them. The 1998 Finance Bill contained measures to introduce greater exchange of information electronically between HMRC and employers. The benefits to both are a reduction in the amount, time and resources spent on paperwork and information between both parties.

Magnetic Media Scheme

Employers joining the Magnetic Media Scheme will

• Receive Annual, Supplementary and Budget code changes on cartridge
• Provide works / pension number updates
• Submit expenses and benefits returns
• Submit year end returns

Note: For information on annual returns see PAYE26015

Annual, Supplementary and Budget code changes on cartridge

An employer who wishes to receive code changes on Magnetic Media is required to

• Complete an enrolment application form, contained within the specification MT1 ‘electronic business – Code Number Changes on Magnetic Media’

And

• Send the completed form to their responsible Processing Office who will forward it to the appropriate Data Centre to which the employer makes payments of PAYE and NIC

You must ensure that if you receive any enquiry from an employer about participating in the magnetic media scheme you should refer the employer to the HMRC website, to obtain a copy of the technical specification ‘electronic business – Code Number Changes on Magnetic Media’ (MT1)’. The specification sets out the required computer specification and criteria for acceptance and should cover any queries the employer might have. You should also advise the employer that the magnetic media scheme is being phased out and encourage them to consider other online filing services.

If an employer requires further information that they are unable to obtain from the MT1 specification or general information about online services generally, then you should refer them to the Online Services Helpdesk.

Data Centres

Any enrolment application from the MT1 specification received from an employer should be submitted to the appropriate Data Centre (the one they remit their tax and NIC to).

Application to the scheme must be made on or before 31 December in order for accepted employers to be able to receive Annual Coding issue the following February.

The Data Centre will

• Consider each application
• Send the employer a formal notice of acceptance, or refusal of entry into the magnetic media scheme (within 28 days of the Data Centre receiving the enrolment application)
• Send a test cassette to those employers accepted into the scheme who have asked for a test cassette on their enrolment application

You must bear in mind that where an employer has more than one employer record, or has a payroll re-organisation that results in creating a new employer record, a fresh enrolment application form needs to be completed for each new employer record.

Effect of employer entering scheme

If an employer is accepted into the magnetic media scheme, the Service Provider Customer Service Centre will set an indicator on the COP employer record displayed on COP Function ED this will show either

• MTL ( Magnetic Tape List)

Or

• MTP6 ( Magnetic Tape P6)

This will depend on how the employer wants notification to be sent to them.

Changes affecting an employer record

You must ensure that where the following situations occur you notify the Data Centre

• Employer changes their address
• Address of employer becomes RLS
• Employer wishes to withdraw from the scheme
• Employer record transfer, merger or succession
• Cessation or cancellation of an employer record

Note: An employer may use Appendix D of the MT1 to notify you that there has been a change to the business address. If this occurs you must ensure that the EBS record is updated.

Code changes will normally be sent to employers towards the end of February each year. The actual dates of the scheduled issue are published in a SCS Memo. You should note that there is no priority issue for magnetic media. Paper notifications (on individual forms P9(T) or lists) are no longer issued as back up. If the employer has a problem with the cartridge received or has not received it you should follow PAYE26011.

Employer’s magnetic media should be retained for three years after the year to which they relate.

Amended notices by batch process

Under certain conditions, it is possible for employers participating in the magnetic media scheme to receive amended notices of coding relating to expenses by batch process. For further information see PAYE12010.