Aug 2013- FAQS - Accounts & Tax

Rental income – husband and wife
Q: My wife and I have some properties in joint names but I stumped-up most of the cash for the purchase of the properties so it seems only fair that I get the lion’s share of the income from them too. But I have been told the income HAS to be split 50:50- is this correct?
A: I’m afraid to say it is the position by default.  If you live with your spouse or civil partner, the income from property held in joint names will be split in equal shares; regardless of any other circumstances.
However, clearly this puts married couples at a disadvantage to unmarried couples and therefore, there is now a way that married couples can apply to have the income allocated in an unequal way.
It does involve an application process though and you’re unlikely to be successful if for instance, your motives are only to shift more income to an individual paying tax at a lower rate.
Category: Income Tax

P11Ds not due anymore
Q: I had originally advised HMRC that P11Ds would be due for my employees, but I made a mistake and actually there are no expenses payments or benefits to return. Can I just ignore the P11D(b) I have been sent to complete?
A: Absolutely not! HMRC will be expect P11Ds and a P11D(b) from you and therefore, if the P11D(b) does not arrive, you will automatically receive a late filing penalty.
You should complete the P11D(b) accordingly- with nil entries and ticking the appropriate box stating ‘No expenses payments or benefits of the type to be returned on forms P11D have been or will be provide’ etc. Then sign and date it and send it to HMRC as you would normally.
Alternatively, you may inform HMRC online that no P11Ds are due- which might be preferable given the proximity of the deadline.

Category: PAYE, NIC & Benefits In Kind

July tax bill
Q: I have just received my income tax bill for my payment due by the end of July. It seems really high- is there anything I can do to reduce it?
A: The payment due in July is like an “instalment” for next year’s tax. HMRC will use your circumstances last year as a basis for setting these.
However, if you have good reason to believe that this year’s income will be lower than last year’s, you may apply to reduce your July payment. This must be done by 31^st January.
Be aware that if you reduce your payments too low, HMRC will levy interest- but you can amend your application if you discover this in time.
Alternatively, you could just prepare and submit your tax return. This will then trigger the comparison of these estimated payments (called Payments on Account), with your actual tax liability. So any over or underpayment will be calculated.

Category: Income Tax

To furnish or not to furnish?
Q: I have just purchased a couple of properties that I intend to let out. Can you tell me whether I am better to furnish them or not?
A: Furnishing has always been an important distinction, as only furnished lettings entitle you to the valuable Wear and Tear Allowance of 10% of the rents.
Now it is definitely worth reviewing whether you could show the property is furnished given that the renewals basis for replacing items in commercial or residential properties let unfurnished ceased from 6^th April 2013.
Loosely-speaking, HMRC guidance is that a property is furnished if it includes some (but not necessarily all) items that a tenant or owner-occupier would normally provide in unfurnished accommodation.

Category: Income Tax

Tax Credits renewal
Q: I have just received my first tax credit renewal pack since becoming self-employed. Do I need to complete my tax return before I fill in the renewal form?
A: Ideally, you should complete your renewal form with the figures entered from your tax return for the last tax year, i.e. year ended 5^th April 2013. This will ensure your tax credits award is as accurate as possible.
However, if you have not yet completed your accounts and tax return for the most recent tax year, you may submit estimated figures to the Tax Credit Office. This must still be done on the renewal forms and by 31^st July 2013 as normal.
You must supply the Tax Credit Office with the actual figures as soon as possible though- and no later than the 31^st January 2014.

Category: Tax credits

Bookkeeping software
Q: I am just starting out and I’m looking to buy some bookkeeping software. Can you list some of the keys differences between desktop software or subscribing to some online software?
A: Desktop bookkeeping software

• Speed- Can be quicker as you’re not working online and therefore reliant on internet speed
• Price- Can be cheaper as may only be a one-off payment; unlike Cloud-based software which may be infinite, monthly subscription payments

Online bookkeeping software

• Mobility- you can work anywhere; anytime provided you have an internet connection
• Communication- you may be able to email your customers through the software; therefore allowing you to attach documents to the emails such as outstanding invoices. Some may even facilitate you takings payments from your customers and others have Apps to download to your smart phone for use when you’re out-and-about
• Integration- Due to the evolutionary nature of Cloud-based software, it tends to be compatible with more software than traditional desktop products
• Security- Check with your supplier, but generally, the data in Cloud-based software is much more secure than in desktop software- which could disappear during a thunder storm!

The generic features of bookkeeping software should be prevalent whichever route you go for though- such as reporting, invoicing, customer/ supplier management, VAT returns, bank reconciliations etc.

Category: General Business

Prince George and The Paupers- An Argument For Inheritance Tax

So another prince has come into the world. He's been born into a world of immense privilage and wealth. Many other babies were born on the same day in different circumstances and financial situations. This is the great lottery of life, by complete accident and luck you can be born a prince or a pauper.
In the words of every child "Its not fair". No it isnt.
Governments attempt to "level the playing field" and reduce the gap between rich and poor, so the rich dont keep getting richer and the poor getting poorer. One of these attempts is Inheritance Tax.
I tend to hear alot of people complaining about inheritance tax, about how you pay tax all your life and even when you die you still have to pay and how "its not fair!", obviously nobody likes to pay tax-including me-but is'nt it only right to attempt to bridge this gap from a societies point of view?, to redistribute wealth for a more equitable society?
Taxpayers will of course try to minimise their tax liabilities, as they are entitled to, but its important that inheritance tax exists and its intentions are understood from a bigger picture view rather than purely self interest.

"Are you serious about business? - then ditch the crap business cards."

I have had a new 6 page leaflet designed and it will be going to print soon. It got me thinking about the many business cards I see. I go to many networking events and see many types of business card. Amongst the most common are the cheap, generic ones you can get on the net. There are a number of suppliers but the best known one rhymes with Blistermint! They tend to be on flimsy paper, with a generic image. Do you know what this tells me about you?
It says I'm not serious about my business, that "you'll see how it goes"- that you have no long term plan-and you won't be here in a years time.
These days quality well designed business cards don't cost much, and are worth the investment. Thats right I said "investment" - not a cost. They represent you and leave a lasting impression of you and your business.
Get your logo designed, something that is unique to you. One of the reasons customers deal with small businesses is because of the unique and personal service they receive-this should be reflected in your marketing material.
Ask yourself if you were presented with a unique well designed quality business card or a cheap poor quality generic card- which are likely to keep and deal with?
Spend a few quid, its worth it, and show me you are SERIOUS!!

June 2013- FAQS - Accounts & Tax

VAT on cars
Q: I am a VAT registered business and we are about to update our fleet of cars. Do I have to charge VAT on the sale of the old cars?
A: The general rule of thumb is you charge VAT on the sale where you suffered VAT on the original purchase of the car and were able to recover it.
However, most businesses are not able to recover the VAT on purchases of cars, unless the cars are:

• Stock for a motor manufacturer or dealer
• Going to be used as taxis, driving instruction vehicles or self-drive hire cars
• Will be used exclusively for business purposes (such as pool cars under certain conditions)

You may have purchased the vehicle from a private individual or non-VAT registered business, in which case you won’t have been charged any VAT on the purchase. In this scenario, you probably only need to charge VAT on any profit you make on the sale (i.e. the difference between the sales price and the original purchase price) but there are some criteria to adhere to in order to apply this. In reality, most cars are sold at a loss and if this was the case, no VAT would arise in this scenario- again, subject to certain criteria being met.
VAT and motor-related transactions are a complex area as there are specific rules that do not apply to any other instances.
Category: Value Added Tax (VAT)

Late P35
Q: I know it should have been filed by 19^th May, but I have only just filed my P35 online. What penalties can I now expect?
A: Where a P35 remains outstanding after 19^th May, HMRC will write to you advising that a penalty may already have been incurred and that the return must be with HMRC by 19th June in order to avoid further penalties.
Penalties for late P35s are calculated at £100 per 50 employees for each month or part month you delay filing your return.
If your return remains outstanding for more than four months, you'll receive a penalty notice shortly after 19^th September and again the following January and May, if necessary. These penalty notices will show the amount of penalty that's building up because you haven't filed your return on time and should tell you how you can pay it.
Please also note that there is a separate penalty regime for the late submission of P11D(b)s, which must be filed by 6^th July.
The filing requirements for this year and moving forward look very different since the introduction of Real Time Information.
Category: Payroll

Wrong tax code
Q: I noticed that the tax code my employer is using has changed and it doesn’t look right to me. I told my employer’s payroll department, but they said they were simply using the code HMRC had told them to. What should I do?
A: HMRC issues your tax code based on information they have about you and it tells your employer or pension provider how much Income Tax to deduct from your wages or pension.
If your tax code is incorrect, I’m afraid your employer cannot simply change your tax code at your request. You will need to contact HMRC on their Taxes Helpline to tell them your tax code is wrong and you will need your National Insurance number and tax reference to hand, which can be found on tax papers such as your payslip or P60.
Assuming they agree, HMRC should subsequently issue a new tax code which your employer will then use.

Category: PAYE, NIC & Benefits In Kind

Correcting a wages error under RTI
Q: I made an error on my last payroll run, which was submitted to HMRC online under their new RTI system. How should I go about correcting it?
A: Under Real Time Information (RTI), employers must submit a Full Payment Submission (FPS) when  a payroll is run and payments are made to employees. If you discovered the error before filing your next FPS you can either:

1. correct the error by using revised year to date figures on your next regular FPS - this is often the easiest way to handle the correction
2. show the adjustment by submitting an additional FPS for the pay period for the employee(s) the error relates to

Whichever option you go for, care must be taken as for instance, you may have to consider the impact on employees' record for National Insurance purposes and you may have to correct year to date information accordingly.
The changes under RTI can be daunting.
Category: Payroll

Losses and Class 2 National Insurance
Q: I have just started my own business and my business plan is projecting losses for the first year. Should I pay Class 2 National Insurance?
A: Class 2 National Insurance (NI) is payable by the self-employed at a flat-rate; regardless of profit levels. Class 2 NI counts towards your entitlement to certain benefits, like the basic State Pension, Maternity Allowance and Bereavement Benefit.
If you earn less than a certain limit (currently £5,725 for 2013/14) you can apply for a Certificate of Small Earnings Exception and not pay Class 2 NI.
However, unless you pay NI on other income such as employment income, you might decide to carry on paying them voluntarily to maintain your entitlement to the State Pension and other benefits.

Category: General Business

Private medical insurance
Q: My company now pays for private medical insurance for senior members of staff. Are there any consequences of this I need to be aware of?
A: For employees (who are not directors) earning less than a rate of £8,500 per year (including their share of the value of the policy), you have:

• no reporting requirements; and
• no tax or NICs to pay

For all company directors or employees earning at a rate of £8,500 or more per year:

• their share of the cost of the policy must be reported on form P11D
• the employer pays Class 1A NICs on the values reported
• the directors and/ or employees under the policy are subject to a tax charge on the value reported on form P11D

The total value of all employee benefits must be reported annually on form P11D(b) which must be filed (on paper or online) with HMRC by 6^th July and any Class 1A National Insurance is payable by 19^th July. Late P11D(b)s will be subject to penalties.
The good news is that the expenditure should be tax-deductible for the company though.

Category: PAYE, NIC & Benefits In Kind

Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Common Q&A concerning tax and accounts - May 2013

May 2013

Late tax return
Q: I still haven’t filed my tax return for the 2011/12 tax year. What penalties could I face when I file it?

A: You should have already received an automatic £100 initial filing penalty. This is payable; regardless of whether you had no tax outstanding or you were due a refund.
However, from the 1^st May 2013, the daily penalties of £10 per day will begin, but these will be capped at £900.
I would encourage you to file your return as soon as possible and ideally, no later than the 1^st August 2013- when a further penalty of £300 or 5% of the tax due (whichever is higher) will be added to your existing penalties. Further penalties will be triggered if the return is over 12 months late.
Please note, the dates referred to are based on the online filing of the return. If, when you file the return, you use a paper version you will face more significant penalties as paper tax returns should have been filed by 31^st October 2012.

Category: Tax Returns

RTI- Annual PAYE Schemes
Q: I am the director-shareholder of my own small company and I don’t have any employees. As a result, I want to register my PAYE scheme as an annual scheme with HMRC for RTI purposes but I can’t get through to anyone. Am I doing something wrong?

A: Annual schemes can be a useful option for many- but particularly one-man limited companies like yours. An annual scheme must meet all of the following requirements:

• all the employees are paid annually
• all the employees are paid at the same time/same date
• the employer is only required to pay HMRC annually

Unfortunately, HM Revenue & Customs (HMRC) have been overwhelmed by requests for annual schemes and changes to payment frequencies. As a result, they are currently unable to process such requests. So it is unlikely you are doing anything wrong.
It states on HMRC’s website that they are working to rectify this position and will publish a further message to announce when the matter is resolved.

Category: Payroll

Closing a business
Q: I have just stopped trading as self-employed as I have been offered a really good job. What do I need to do and do I need to tell HMRC?

A: You should tell HMRC that your trade has finished as soon as possible, so that HM Revenue & Customs (HMRC) can get your tax affairs in order. This should also bring your Class 2 National Insurance bills/ Direct Debits to an end as well. The easiest way to do this is to use HMRC’s online form called ‘Stopping self-employment’. You'll need to provide your contact details, date of birth and  (depending on your circumstances) you'll also need your Ten-digit Unique Taxpayer Reference number or National Insurance number.
Please note, the online form only covers self assessment and National Insurance, so if your business was say, VAT-registered, you will need to separately notify HMRC of the cessation of the VAT registration.
You will also need to complete a tax return for the tax year in which the trade stopped. Once HMRC have processed this, they may send you a letter stating that they no longer require a return from you if your only source of income is from employment.
Computing the profits or losses from a trade in its final year can be tricky, particularly with regards to Capital Allowances and the use of losses. But your local TaxAssist Accountant would be happy to complete your final return for you and deal with notifying HMRC of the cessation of the trade.
Category: General Business

Tax relief on buildings
Q: I have just had a storage unit built for my business. Can I offset the cost of the building against my profits?

A: In short and as a general rule, the answer is no. Tax relief on assets, usually comes in the form of Capital Allowances. However, Capital Allowances are generally not available for expenditure on land or buildings. Tax relief on the cost of land and buildings is instead obtained via the Capital Gains Tax regime when the asset is sold.
However, you may be able to claim some Capital Allowances on certain expenditure on certain buildings, such as:

• Fixtures and equipment in the building such as some kitchen equipment,
• Features “integral” to the building such as lighting systems; and
• Thermal insulation

But there are some very complex rules and conditions attached to qualifying for such Capital Allowances, so I would strongly advise you to seek professional advice to ensure you do not under or over claim. Your local TaxAssist Accountant can advise you on Capital Allowances and prepare your claim for you.
Category: General Business

What does a liquidator do?
Q: Can you give me an overview of what a liquidator does please?

A: A liquidator is an authorised licensed insolvency practitioner. Their primary function is to collect the firms’ assets, realise them and then distribute the net realisation proceeds according to a statutory priority order. The liquidator also has to investigate why the firm failed, and take the required action to bring those directors who have acted improperly to justice.
They can require the attendance of anyone who might have or is known to have, company assets in their possession, as well as those who owe the company money. In order to assist with the investigation, the liquidator can ask the court to summon anyone who might have information concerning the company’s affairs, its property and business dealings. The court can also compel the production of company records or relevant documents.
But the liquidator's role can vary slightly depending on which liquidation process they are assigned to.
There are three main types of liquidation processes which Licensed Liquidators deal with:

1. Creditors’ Voluntary Liquidation
2. Members’ Voluntary Liquidation
3. Compulsory Liquidations

This information was brought to you by F A Simms & Partners who specialise in advising and supporting on all business rescue matters. For more information regarding the content of this article please contact FA Simms & Partners today on 0845 072 2500 or email taa@fasimms.com.

Category: General Business

P11Ds- how can I reduce the burden?
Q: I’ve just submitted forms P11D and P11D(b). My P11Ds mostly cover reimbursed expenses, so as you can imagine, they’re very fiddly and time-consuming. Is there any way I can reduce the paperwork and preparation time?

A: You could apply for a dispensation (or form P11DX) from HMRC. If you are successful, this form completely removed the requirement to report reimbursed expenses on form P9D or P11D.
There is a list of expenses that can be covered by dispensations, but examples of expenses typically covered are:

• Travel, including subsistence costs associated with business travel
• Fuel for company cars
• Hire car costs
• Telephones
• Business entertainment expenses
• Credit cards used for business
• Fees and subscription

Put simply, to stand a chance at obtaining a dispensation, you must have an independent system in place for checking and authorising expense claims so as a minimum, someone other than the employee must check their claim. If you are a sole director, you may still be successful, provided that you obtain receipts for all expenditure and the expenses are within the list referred to above.
A dispensation covers these items indefinitely, however, HMRC reviews them regularly (usually at intervals of five years or less) to make sure the conditions under which it was granted still apply. Please note, a dispensation may not completely negate the requirement for P11Ds though. So if benefits in kind are provided, such as a company car, you will still need to complete forms P11D and P11D(b).


Category: PAYE, NIC & Benefits In Kind

Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Tax & Accountancy Q&As - April 2013

Car benefit changes 2013/14
Q: Can you summarise what the changes to company car and van benefits are from 6 April 2013 please?

A: From the 6th April 2013:
Company cars

• The car fuel benefit charge multiplier will increase from £20,200 to £21,100
• The lower threshold will be reduced from 120g/km to 115g/km
• The lowest appropriate percentages are still 0 per cent and 5 per cent
• The 10 per cent charge will now apply to cars with CO2 emissions of 76g/km to 94g/km
• The appropriate percentage will increase by 1 per cent for all vehicles with CO2 emissions between 95g/km and 215g/km, to a maximum of 35 per cent

Vans

• The van fuel benefit charge multiplier will increase from £550 to £564
• The van benefit is frozen at £3,000

Category: PAYE, NIC & Benefits In Kind

Leasing a car
Q: I’m thinking of leasing a car in the name of my personal company. Do you have any recommendations to keep the tax burden down?

A: Firstly, if the car triggers a benefit in kind, then you will always be better off looking for a vehicle with low CO2 emissions, as this will result in a lower car benefit percentage and therefore a lower personal tax liability for you.
Furthermore, you should also be aware that if the car has emissions over 130g/km, it is likely that 15% of the lease payments will be disallowed for corporation tax purposes. If the emissions are below this level, the entire lease payments should be tax deductible.


Category: General Business

Do I have to give a P60?
Q: I have some part-time staff and one of them has asked me for a P60. I don’t manage a payroll because I don’t pay any of them enough. Do I have to supply my employee with a P60? I’ve never done one before.

A: You are only obliged to provide your employee with a P60 if you were obliged to operate a P11 and register as an employer. Based on what you have said, it sounds as if this does not apply to you and therefore, you are not obliged to supply them with a P60.
However, they have obviously asked you for the form for a reason (perhaps they are completing their Tax Credits forms), so out of goodwill, you could complete one for them voluntarily from your records. But needless to say, a corresponding P14 does not need to be sent to HMRC.


Category: Payroll

VAT return due date
Q: I have a VAT return to submit for the period ended 28^th February 2013. When do I need to submit it to HMRC?

A: Normally, you have one month and seven days to submit your VAT return if you file it electronically. As your VAT return is dated 28^th February 2013, you have until 7^th April 2013 to file it with HMRC.
However, HMRC's VAT online service will be unavailable between 6.00am 4^th April and 6.00am 6^th April 2013. So I would encourage you to submit your VAT return early by 4^th April 2013.
Remember, late VAT returns may be subject to surcharges.

Category: Value Added Tax (VAT)

RTI and small employers
Q: I have two staff that I pay weekly, but I only run my payroll at the month end. I am aware that of the changes under RTI, but will I really be expected to operate my payroll every week from now on?

A: HMRC have announced that until 5^th October 2013, employers with fewer than 50 employees may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5^th).
Little detail has been released surrounding this announcement, but it sounds as if adoption of the concession is optional; not the default.
But this should be of great benefit to employers such as you that pay their staff weekly but only run the payroll once a month. It should mean that you payroll process will be fairly unchanged under RTI until 5^th October 2013.


Category: Payroll

Emailing P60s
Q: I try to keep my office paperless and I was wondering if I can email my employees their P60; rather than printing them all off.

A: Since 2010/11, form P60 can be provided on paper or electronically.
But you should confirm with all of your employees that they are happy to receive their P60 electronically before proceeding to email them. Your staff will need to ensure that they have access to secure facilities to view and print a copy.
If your employees prefer not to receive their P60 electronically, then you will have to provide them with a hard copy as normal.


Category: Payroll

Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Q & A - March 2013

What is a CVA?
Q: My company is experiencing some cashflow problems and a friend suggested I should consider a CVA? What is a CVA?

A: When a company is in financial trouble there seems to be a main direction that directors turn to; liquidation. However depending on the circumstances there are a few business rescue alternatives that may suit the situation better.
The CVA (creditors’ voluntary arrangement) option provides a realistic alternative to liquidation for an insolvent company. This process gives directors an option of trading out of a difficult period to help with future profitability.
Below there are 8 key facts that all directors should know about the CVA option:

1. There is no mandatory repayment time frame or repayment amount
2. Following successful completion of the CVA the balance of debt not repaid through the CVA is written off
3. The company remains under the control of the directors
4. HM Revenue & Customs has a very high success rate for CVA acceptances
5. A company needs only 75% of creditors’ to agree for a CVA to be approved
6. The company is allowed to continue trading throughout a CVA
7. To get the creditors’ approval you must show them how a CVA is more beneficial to them then the alternatives
8. There is less focus on directors during a CVA and no investigations are made or submitted to the Insolvency Service

These facts highlight the key features of a CVA in which a director should be aware of when considering all the options available to insolvent and struggling companies.

Category: Corporation Tax

Should the business pay us rent?
Q: My wife and I own a commercial property personally, but our company operates from it. Is there any tax advantage in the company paying us rent?


A: Your suggestion has good and bad points to consider. On the plus side, the rent payments are tax deductible for the company, so it will serve to reduce the company’s tax liability. The rent is taxable in the hands of your wife and you, but shouldn’t attract National Insurance.
However, you are likely to forego some of your Entrepreneur’s Relief on the sale of the property. Entrepreneur’s Relief reduces the rate of Capital Gains Tax payable from 28% to just 10% on gains arising on the sale of business assets- provided certain criteria are met.
You must also consider whether there will be any VAT implications of charging a rent.

Category: Tax Planning

What happens if I pay my corporation tax late?
Q: I paid my company’s corporation tax late because of cashflow problems. Will I be charged interest and penalties?

A: Interest will indeed be charged from the due date, to the date HM Revenue & Customs received their payment from you at their official ‘Late payment interest rate’. However, there are no late payment penalties for corporation tax at the moment.
Please note, this only applies to the payment of your company’s outstanding corporation tax. So if you also filed the company’s corporation return late, then HMRC will charge you late filing penalties.

Category: Corporation Tax

Company cashflow problems
Q: I am a director of a small company and it is having quite serious cashflow problems. What should I do?

A: The best thing a director can do when they feel their company is not trading as successfully as it should is to seek professional help as soon as possible.
As a director it is your job to seek help if you notice your company is in trouble and if this trouble will affect the creditors and the funds.
If you are aware that your company is struggling but continue to trade without seeking helpful advice then, amongst other misdemeanours, you can be seen to be wrongfully trading your company. Under S.214 of The Insolvency Act 1986 it states that they can hold the director personally liable to make a contribution to the company’s assets in order to minimise the loss to the company’s creditors. Put simply, this means your own personal assets such as your home could be seized in order to repay the company's debts.
The best course of action for you to take is to seek advice early on as there could be company rescue options available to keep the company trading and avoid you breaching your responsibilities as a director.
Category: Corporation Tax

What happens when the P46 goes?
Q: I have been trying to keep abreast of all the changes being introduced as part of RTI. But I noticed the P46 for starters will go. How will employers now collect the relevant information from their new employees

A: Under Real Time Information (RTI), employers will send HMRC information about employees' pay when- or before payments are made. This should mean more employees will pay the right amount of tax and National Insurance in the tax year.
Under RTI, when a new employee starts then forms P45 or P46 will no longer be sent to HM Revenue & Customs (HMRC).  However, the details will still need to be collected, but they will automatically be reported to HMRC online in the weekly or monthly Full Payment Submissions (FPS) submitted via your payroll software.
RTI is being introduced in April 2013 and will mark the biggest change to payroll since the 1940s.
Category: Payroll

RTI- what are the rules with regards to penalties?
Q: I have been trying to keep abreast of all the changes being introduced as part of RTI, but I am really struggling to understand the penalty regime. Can you explain it to me please?

A: Under Real Time Information (RTI), employers will send HMRC information about employees' pay when- or before payments are made. This should mean more employees will pay the right amount of tax and National Insurance in the tax year.
Unless you are already operating RTI as part of HM Revenue & Customs’ (HMRC) pilot, the rules can be summarised as follows:

	2012/13	2013/14	2014/15
Missing payment penalties No payment to HMRC is made	Yes	Yes	Yes
Underpayment penalties A payment is made, but it is less than the liability due	No	Yes	Yes
In-year late filing penalties For late in-year submissions	No	No	Yes
Year end late filing penalties For late year end Full Payment Submissions	Yes	Yes	Yes
Inaccuracy penalties - for inaccuracies specifically with a year end period	Yes	Yes	Yes
Inaccuracy penalties - for inaccuracies specifically within an in-year FPS	No	Maybe	To be confirmed

 

Please be aware that HMRC have u-turned on or amended some of their proposals, so the above rules are subject to change.

Category: Payroll