RTI is coming!

Discussion in 'PAYE letters 2010' started by FrankN, Mar 15, 2013.

  1. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    If you don't accept a correctly laid out P45 (Online) then you're making up your own PAYE rules rather than following HMRC instructions. Your obligation as a payroll operator isn't to construct your own ideas of what makes clients safe. It is to follow HMRC's rules.

    I trust that if an employee were to pay too little tax because you didn't accept a P45 (Online) (eg with tax code D0 or D1 on it or a K code and you operate a 0T or BR P46 instead) you would indemnify the client. I also trust that if an employee suffers consequential loss because they don't get a timely tax refund that they were entitled to having handed the employer a P45 (Online) you also indemnify the client.

    Wouldn't it be simpler to just obey HMRC's rules and not make up your own? Refusing to accept the P45 (Online) document is not operating PAYE to the letter. It is ignoring the rules. There is nothing in the guidance that allows a P45 (Online) to be rejected.

    I have to confess, that I'm wondering from your response if you even know what a P45 (Online) is? You seem to think that it is an email or PDF document.
     
    Last edited: Mar 31, 2013
    Posted: Mar 31, 2013 By: Tom McClelland Member since: Feb 10, 2008
    #21
  2. skytecuk

    skytecuk UKBF Newcomer Free Member

    32 0
    Just some general advice needed along the lines of RTI...from the small business perspective.

    My wife and I have generally paid ourselves out of our salary + expenses 'as and when' required or when the business can afford it, and recorded payroll at the end of the month.

    We have filed a FPS with RTI using 12 pay once so far.

    We have entered into the settings that we receive pay weekly.

    Under RTI do we now have to pay ourselves weekly rather than at 'random' times? Or can we pay a lump sum up to the declared amount?
    We pay ourselves by bank transfer.

    Also, this is a silly question, but do mileage expenses go through on the payslip under RTI too?

    Many thanks!

    >> Furthermore- how do HMRC 'track' the ACTUAL payment if made by BACS? I understand the hash tag is not required for smaller companies using bank transfer..plus some companies still pay by cheque?
     
    Last edited: Apr 24, 2013
    Posted: Apr 24, 2013 By: skytecuk Member since: Jul 3, 2009
    #22
  3. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    You can pay yourself a lump sum as long as you pay LATER than the FPS(s) that you file. In effect this means until you take the money you're running up a DLA that is in credit. You mustn't take the money ahead of the FPS.

    HMRC only tracks actual payments in real time if you make bank transfers through direct BACS, ie you have your own BACS Service User Number. Otherwise HMRC has no tracking mechanism other than the traditional random inspection.
     
    Posted: Apr 24, 2013 By: Tom McClelland Member since: Feb 10, 2008
    #23
  4. skytecuk

    skytecuk UKBF Newcomer Free Member

    32 0
    Thanks Tom.

    So if I need a lump sum by the end of the month, so long as we've submitted the FPS weekly already, we're ok?

    Do expenses have to be included in the FPS?

    Is it better to implement a 'tracking mechanism' - would it avoid inspections?
     
    Posted: Apr 24, 2013 By: skytecuk Member since: Jul 3, 2009
    #24
  5. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,892 789
    You aren't required to include expenses in the FPS unless your payment mechanism is that you pay them through the payroll.

    I would make sure that you know your true Dr/Cr situation on net pay vs DLA at all times. It would avoid awkward questions if you happened to be inspected.
     
    Posted: Apr 24, 2013 By: Tom McClelland Member since: Feb 10, 2008
    #25
  6. Caspar

    Caspar UKBF Newcomer Free Member

    225 40
    There is another point to consider.
    EG
    Director is £6000 overdrawn in his DL account. Director is paid say £9, 000 pa through payroll but only takes this as a lump sum at year end. Most people I will imagine will put nil EPS reports through for months 1 to 11 and then a full FPS in month 12 for the lump sum.

    HOWEVER, if say in month 3 the director pays for his holiday deposit through the company or pays for some personal shopping in month 5. As his/her loan account is overdrawn, these small payments will be considered to be wages drawn and an FPS report will be required on or before these payments are made.

    What is happening this year is that HMRC have intimated that no fines/penalties will be raised for RTI reporting to give people a chance to get to know what they are doing. However as of April 6th 2014, hmrc will start givjng penalties out for late or non submissions, pretty similar to the current regime with CIS schemes where currently penalties are £100 per month, up to £1200 per annum.

    Regarding the P45 scenario mentioned at the start,most software providers have been authorised to print their own. A black and white pdf is acceptable in my opinion. Even under the old schemes last year, if I sumbitted the employee as a starter as soon as I received the p45, and it had already been used by another company who had uploaded theirs. Then HMRC would send me a revised tax code. I always ask the employer to ask their employee if this is their only job to avoid this, its good practice, even though the employee can lie, if you follow procedure of notifying Hmrc asap of the new starter, you can avoid potential underpayments of tax. I feel very sorry that the original person posting this thread financially suffered and wonder if they dealt with this alone or did they have an accountant to fight their corner?
    Caspar
     
    Posted: May 25, 2013 By: Caspar Member since: May 23, 2013
    #26
  7. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

    11,434 3,564
    Can you provide a link to back up that statement, please?
     
    Posted: May 27, 2013 By: David Griffiths Member since: Jun 21, 2008
    #27
  8. Caspar

    Caspar UKBF Newcomer Free Member

    225 40
    I went on an RTI course where Rebecca Bennyworth MBE talked about RTI and Directors on the payroll at length, and this point specifically came up. (She has her own practice too).

    It is a way I suppose of ensuring the directors whose loan accounts are overdrawn, take their pay from the payroll as and when rather than leaving it to just a 'journal' at year end.

    From time to time I see Directors of smaller companies using the company bank account as if its their own personal account, who this would affect. I have written to my clients to draw their attention to this, as if they are to pay for anything personal (and have overdrawn DL accounts), when hmrc starts its penalty regime - this could cause them a potential problem upon any inspection. I have advised them if they must draw out, to keep it to the end of the month when the FPS is due, and to notify me for payroll purposes.

    We were informed that this will not apply if the DL account is in credit. As on paper any personal drawings sent to the DL account would be classed as repayment of capital.

    Caspar
     
    Posted: May 27, 2013 By: Caspar Member since: May 23, 2013
    #28
  9. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

    11,434 3,564
    Thanks for the reply, but I was looking for something a little more concrete. Do the course notes give any reference for this?
     
    Posted: May 27, 2013 By: David Griffiths Member since: Jun 21, 2008
    #29
  10. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

    11,434 3,564
    Thinking about this further, I suspect that this is connected with the rules relating to loans to employees to third parties, and a possible misunderstanding of the position

    I believe that these rules only apply to payments made on a company credit card, and don't apply to direct payments from the company or (as far as I know) to payments made with a debit card.
     
    Posted: May 28, 2013 By: David Griffiths Member since: Jun 21, 2008
    #30
  11. Caspar

    Caspar UKBF Newcomer Free Member

    225 40
    The notes say the following -

    Dealing with director loan accounts under RTI

    Commonly a director of his own company will draw against his loan account throughout the year, and at the end of the tax year, the accountant will resolve this by putting through an annual salary and reporting this on his form P35. Commonly the salary is insufficient to generate tax or NI, but sufficient to allow the director to obtain state pension credits.

    Because the salary has in effect been 'paid' when the director drew against his loan account during the year, the employer has a breach of the 'on or before' reporting requirement, unless the director at that point draws the amount of net pay - possibly repaying the sum to the company to reduce his loan account balance. This may not be practical - the company may not have sufficient funds to make such a payment.


    Either way, I have taken this advice on board, and am implementing it with my clients, for those directors whose loan accounts are overdrawn and who take drawings from time to time, I will not be submitting 11 nil EPS's. To ensure they are not breaking the 'on or before rule.'

    Caspar
     
    Posted: May 28, 2013 By: Caspar Member since: May 23, 2013
    #31
  12. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

    11,434 3,564
    The issue with that approach is that the payment might not cleared by a salary entry, it might be cleared though a dividend. How that would be unscrambled if it's been reported under RTI might be interesting.

    Certainly it's better to put salary through at the start of the year than the end, and in practice it's not too difficult to file monthly.
     
    Posted: May 28, 2013 By: David Griffiths Member since: Jun 21, 2008
    #32
  13. Caspar

    Caspar UKBF Newcomer Free Member

    225 40
    I agree David,

    If they are on the payroll (as not all directors are if they have other businesses), it is definitely going to be safer putting their drawings as wages drawn up to the amount you would normally be putting through in the year, if they fall into this bracket of having an overdrawn DL account, and are on the payroll.

    The only other thing I would consider, is that if they are getting near to the set wages amount with their drawings, that an interim dividend is declared to try to combat, having to put additional wages through the payroll that will be later declared as dividends, in the hope of carrying the drawings until year end dividends are declared.

    All this RTI is a nightmare as we know, the employers are yet again having to pay out additional fees for doing the work of HMRC. The irony is, that aren't HMRC declaring that they are going to save millions of pounds by introducing RTI to link it with Universal Credit! Yet, the cost to the poor UK employers is likely to be just the figure they are saving. And a mither to the accountants having to implement it each week/month.

    Caspar
     
    Posted: May 28, 2013 By: Caspar Member since: May 23, 2013
    #33