Author: Yvette Lamidey
Published in: Payroll Prof.
Date: May 2007
Taxation: Online Filing
Keeping the momentum going - Update on in –year online filing following the Budget announcements
Employers shouldn’t be lulled into delaying their go-live of filing in-year returns on live just because the mandation was deferred in the March 2007 Budget. Starting now and making sure that your software will be compliant means that you have plenty of opportunity to get it right and avoid any penalties for failing to file on line.
It was announced in the March Budget that the timetable for mandatory in-year online filing has been deferred by 12 months. This means that employers with 50 or more employees will have to file their in-year forms (P46, P45(1), P45(3), PENNOT) online wef April 2009 and employers with fewer than 50 employees wef April 2011 . The deadline for filing end of year Returns for employers with fewer than 50 employees remains as 2010 i.e. the Return for 2009/10 must be filed online by 19 th May 2010.
The deferral results from the recognition of the change that employers and their Agents will have to implement in order to comply with the requirements, specifically recognising that it cuts across various administrative processes and systems.
Employers and their Agents will have more time to become used to the validation processes and messages. And HMRC will be able to ensure that their systems will fully support employers and their Agents and give time for everyone to build their confidence in their and HMRC's systems by using them as soon as they are available to send data online.
HMRC are already working with software developers, Agents and the representative bodies including the IPP to understand what the deferral means to employers to each group especially as many developers have already undertaken a considerable amount of development work to make the necessary changes to their products so that the new validation rules can be incorporated as well as the filing facilities.
HMRC have also announced that the ‘failure to file online' penalty will not be applied until the last quarter of 2009/10. It is hoped that during the first three quarters where an employer, with 50 or more employees, has submitted hard copy forms a letter will be sent to then telling them what the penalty would have been had it been incurred. This should help employers understand the impact of failing to file online and ensure that any weaknesses in their systems are corrected/strengthened.
Once the impact on employers, payroll providers/software developers and agents has been understood HMRC will publish further information, specifically around validation of the in-year data. In turn this information will be passed on to you in articles and through Newsonline.
Don't wait until 2009
Whilst the mandation has been deferred by 12 months giving you the opportunity to ensure that this becomes part of your everyday working processes and that systems, procedures and forms have been updated we recommend that you seriously consider implementing in-year online filing as soon as your software provider makes it available in their product - which for many is likely to be during 2008, if not the start of the 2008 tax year.
At the moment it is difficult for us to understand if those software changes will be part of the standard annual release that you would receive as part of your normal contractual arrangements or if providers will be charging an extra fee for the requisite tools.
Changes to P46 processes
The changes that were detailed in last month's articles will still come into effect from April 2008 and will give more time to get used to them before the mandation is introduced.
Yvette Lamidey
Yvette Lamidey is director of Paris and Parks Consulting
www.parisandparks.com