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purpose of collecting income tax and Class 1 National Insurance contributions (NICs) via the pay as you earn (PAYE) system i.e. payroll and RTI. Previously it would have fallen to the intermediary to make this assessment. So, why was the CSL forum considering off-payroll working in the public sector in their March meeting? Student loan deductions for intermediaries are accounted for through self-assessment (SA) and not PAYE. The deemed payment which is established as a result of IR35 is for tax and NICs purposes not for student loan repayments. However, whilst your software may be able to process a payment and not make a deduction for a student loan repayment, HMRC systems are unable to distinguish from the FPS whether the individual named is an employee or a worker with a ‘deemed payment’. As a result, HMRC will issue (where applicable) a form SL1 which in turn will initiate the ‘nudge’ activity that will begin with a first-employer-prompt, then a second and then a phone call – at which point the employer or increasingly frustrated agent can explain that no deduction is due. Early discussions considered a refund might be payable by HMRC, but clearly no processes or procedures are in place to enable this; and so, as it stands, where a deduction for a student loan repayment is made by the fee payer and paid over within the normal remittances it is likely to be accounted for in the usual process which the individual borrower can then include within their SA return. It is likely that, by the time you read this, guidance will have been published or cascaded that confirms the final stance being taken (hopefully as an interim measure) until HMRC systems can be amended to enable the employer to highlight in the FPS where an individual is caught by IR35, maybe by way of a flag, that will prevent unnecessary burden being added to an already overworked employer and their software developer. Certainly this is the call being made from stakeholders at CSL and through other relevant forums. BCS payroll group ● EDI decommissioning – Electronic data interchange (EDI) decommissioning will happen in April 2018 and the final
submission for EDI users will be on 19 April 2018. No prior year or earlier year updates will be possible for the 2017/18 tax year via EDI; they will have to be submitted via XML processes. ...question as to whether HMRC will continue to provide this tool going forward... HMRC’s software developers support team (SDST) are largely waiting until the new Government Gateway is live before entering the next stage of transfer from EDI to XML. If you use the Basic PAYE tool (BPT), a review of this provision is currently in the discovery phase (early research stage) and the question as to whether HMRC will continue to provide this tool going forward will come out of this discovery work. ● Closure of the Government Gateway – The SDST are sending updates about the closure of the Government Gateway (due to switch off in February 2018) to software developers who are registered to receive their emails. If you design your in-house software and aren’t getting these updates you need to stay up to date with their briefings by emailing sdsteam@hmrc. gsi.gov.uk. ● Optional remuneration arrangements (OpRA) – It was confirmed that with only sixteen days remaining before the start of the new tax year, no P46(car) update would be available for the 2017–18 tax year to enable employers captured by the new rules of OpRA to report a value other than the list price which is normally the starting point for calculating the cash equivalent of HMRC to ask whether guidance will be forthcoming that will help employers understand whether they can report a value other than list price (or its notional price, where it has no list price). Though HMRC’s booklets 480 and 490 should be updated by May that is little help for employers providing new company cars from 6 April who cannot claim transitional protection from the new rules. n the company car benefit in kind. The policy team have contacted
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Issue 30 | May 2017
| Professional in Payroll, Pensions and Reward |
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