Author: Yvette Lamidey
Published in: PAYadvice
Date: April Edition
Taxation: Electronic Delivery
Tips And Traps
This article will give you a number of pointers that you should be considering for this year's end of year returns and also in-year online filing.
Form P35 – the form has changed adding a box for the online filing incentive payment. You may wish to check that your software has been amended to take this into account.
Employer PAYE reference number – although you may have set up your employer PAYE reference number on your payroll system some years ago it would pay to check that the correct number in the correct format has been set up. A very high percentage of the online filing errors in 2004 were due to incorrect PAYE reference numbers. The most common error is to repeat the tax office number (first 3 digits) as a prefix to the PAYE reference number. Remember that the reference number must always be entered in upper case.
Scheduling – if your system or maybe tools on your payroll server has scheduling options please consider using these to submit your end of year returns both internet and EDI filing. By scheduling the submission for later in the evening, early in the morning or over the weekend you may find that you have a better experience since there will be far less traffic.
Filing dates – as you'll be aware the Internet filing services have been closed until 6 th April, when it is launched the validation functionality will have been implemented so that your returns will be validated on submission. Although the service will not allow you to submit the file you can still prepare your return and if you use the HMRC online service you can enter your data in readiness to submit when the service is live. You should check on the HMRC website to see if there are any messages posted re an earlier availability of the service.
HMRC are aware that some software will not allow employers to roll forward to the new tax year until the end of year returns for the current year have been successfully filed. This means that there is likely to be high traffic on the 6 th and 7 th April. Employers are therefore asked to consider delaying filing their returns until 8 th April or later unless they need to do so to move forward to the New Year. Don't forget that you should ensure that you have built in sufficient time to repair and resubmit your return should it fail the validation on initial submission.
EDI users will be able to submit their returns from 15 th March and as last year the returns will be validated against the quality standard on submission.
CIS deductions – there were a number of employers who tried to bodge their software to submit their CIS deduction information by submitting the PAYE information and then submitting an amended return with the CIS information in the PAYE boxes. This will not work for 2005/6 and you must ensure that your payroll software can manage CIS deductions if you submit these through your PAYE reference.
Incentive payments – where possible employers are encouraged to self serve the incentive payment by reducing the next tax and NICs payment after successfully filing the 2005/6 return. If you require a cheque payment these will be processed more quickly than last year but any monies owed i.e. a balance showing on the employer's account will be offset against the incentive payment.
The February edition of Notes for Payroll Software Developers gives a range of examples of how to account for the incentive payment on the P35 and is available on the HMRC website.
Penalty notices for 2004/5 – at the time of writing the article these still hadn't been processed since there is still an amount of data to be repaired and processed or married up with part returns and processed. It does not mean that HMRC will not be issuing penalty notices where these are appropriate!
When is a return due? – A number of employers have submitted returns without any earnings or deductions information and these returns were not actually required. HMRC have confirmed that a return is only due where the employer must set up a P11 deductions working sheet, or equivalent, for an employee. If there are no such employees a return is not required. A P11, or equivalent, must be set up for an employee where pay is at or above the LEL, where HMRC have issued a code number for the year or P46 cases as detailed in the E13.
In-year validation – the EDI in-year validation for forms P45 and P46 is being brought inline with the Internet validation. This means that NINOs and tax codes that do not meet the quality standard will cause the form to be rejected.
Yvette Lamidey
Yvette Lamidey is director of Paris and Parks Consulting
www.parisandparks.com