• The requirement to calculate the amount received in Euros and not UK sterling will also add to the administrative burden of the employer. We understand that the entry field on the EPS will be a numeric field only and you will not require payroll software to allow for Euros to be reported. • We must ask if it would be possible for the employer to report the figure in Sterling and HMRC then perform the currency conversion using the rate in force at 1 April. This would reduce the risk of error or omission by the employer significantly. It would also reduce the administrative burden that government is placing on the employer. • HMRC will need to ensure that the exchange rate to use as at 1 April is explicitly and obviously advertised. Payroll software will have deployed their new year tax updates before this is available so the employer will need to enter this manually. • Not all businesses will be equipped now to make their EA claim in April. We understand that making the declaration will continue to be acceptable practice at any point throughout the year however HMRC systems will accrue a ‘debt’ each time the EA is offset until an accepted declaration is made. HMRC will need to adapt their processes to ensure that unnecessary and stressful challenge is not made to employers who simply haven’t yet made the declaration – maybe because they are experiencing difficulties in establishing whether they have received de minimis state aid and if so, how much. • We are concerned that many employers may be prevented from accessing EA for fear of erring in what is an extremely complex requirement – this would be contra to the policy aim to encourage and enable growth in SME. • Of an even greater concern is the risk that employers will make incorrect declarations and/or report incorrect amounts or indeed, report in sterling rather than Euros – all would be incorrect – what are the compliance and enforcement penalties of such error? • The impact of our impending exit of the European Union (EU) needs to be made clear. We understand that where we exit with an agreement in place the UK State Aid Regulations will ensure that this obligation will continue but what if no agreement is in place? HMRC will need to ensure that they communicate that reporting in Euros will still be required as this will appear to be nonsensical once we exit the EU. • As mentioned above, this is not a payroll process and so employers will face increased costs from their service provider, if the payroll provider agrees to support the employer in reporting this information – not all software has included an EPS in the past. In this situation the employer makes use of HMRC Basic PAYE Tools (BPT). • We foresee a possible increase in the employer having to report, independently, by using the EPS on BPT functionality. HMRC guidance will need to make clear which EPS would take priority in the event that for the same tax period two EPS were submitted, one by the employer with the EA declaration and state aid amounts and one by their payroll provider due to a reclaim of statutory payments (assuming a priority existed). • We understand that the employer will only have to account for any other de minimis state aid they have / or expect to receive in the previous two years and current year, as HMRC will account for the full £3,000 EA – even where the employer may not claim the full amount – this needs to be made clear in guidance as there is a risk that it could be double accounted for i.e. by the employer and then again by HMRC. • There appears also to be confusion between the three year period to be assessed to be used, therefore we seek clarification as to whether HMRC will be using a three tax year assessment period (two preceding plus sufficient remaining to claim EA in the current year) or on a true rolling three year basis? • As Employment Allowance is claimed throughout the tax year – using tax years as a basis would be the most accurate. Rolling years risk an otherwise eligible employer becoming ineligible due to there exceeding the limits at a fixed point in time i.e. 6 April.
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
Page 367 of 629
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