Payroll insight
How if at all is HMRC’s delay in revising the design of the form P46(car) impacting employers, clients and employees? Susan: Employees generally prefer having the correct amount of tax deducted under the PAYE system. In fact, many do not understand it as an on-account system. With no amended form P46(car) it means the right tax may not be deducted in the tax year. This is not helpful for new employees or others impacted before the transition rules come to an end. It is likely to result in some tension between employees, employers and HMRC. Plus, potentially, a greater volume of calls to the HMRC helplines. Claire: It is making an already difficult task more difficult. How can companies be expected to remain compliant, when the documentation isn’t available or up to date? Richmal: I believe that whilst the delay is inconvenient, the delay will not have too much of an impact on employers and employees. Samantha: The delay in the redesign of this form is significant, but equally unsurprising. If we look to the input of car data by employers that have committed to voluntary payrolling we can’t fail to be surprised by this delay. The transitional protection is hugely welcome but it only covers existing arrangements that are not subject to change and completely overlooks the employee turnover in industries and sectors that are significantly impacted by OpRA. We will look to HMRC to ensure that their contact centre teams are fully aware of this delay when employees challenge tax code adjustments that will become necessary as a result of the OpRA cash equivalent reported via the P11D return. The employer must not be made the scapegoat by HMRC contact centres. All too often we hear the mantra ‘your employer has made a mistake’ when employees call HMRC helplines. The personal tax account (PTA) has the potential to play a large part in minimising the impact on the employee and we hope that HMRC are proactively communicating with employees to prompt them about this when they input up-to-date car data or a P46(car) is processed and they are matched as also having accessed their PTA. n
pensions, cycle to work and low emission cars). This is because, firstly, it will be less administration for employers; secondly, there will be no National Insurance relief for employers; and, thirdly, there will be less take home benefit for employees to remain in these schemes, and they could end up paying more tax on the benefit as a result of being in one. Samantha: Time, together with knowledge of tax professionals, will guide the future use of sacrifice and thus the impact of OpRA. These, when coupled with sector demands and available employer resource, will we believe still see a long-term place for sacrifice or an element of choice between cash and non-cash benefit. This is particularly so given the exemptions currently in place for pension, childcare vouchers and the environmentally favourable cycle to work schemes and ultra-low emission vehicles. Clearly these can only be short-term exemptions if improved tax revenue to the Exchequer remains high on the priority list for cash-strapped government. Remuneration packages that contain an element of ‘non-cash reward’ remain of interest to employees and perks that are traditional to certain sectors will continue to prove attractive in retaining and attracting key talent for some employers. Susan: I expect changes for certain benefits may be seen over time, such as a reduction in take up or withdrawal of the offering, but I do not think it signals the end of salary sacrifice. In the longer term, I wonder if we will move to flex allowances, which you spend or lose covering certain benefits. In addition, we may see a move away from cash alternatives to company cars or at least a big reduction, with a focus only on those who need a car for work. Claire: Some companies have taken advantage of the pre-2017 rules and used them for benefits such as white-goods. So, I can understand why the changes have come in. If there is no tax or National Insurance advantage for the benefits this will naturally discourage employees from entering a scheme. However, that will depend on the employer providing the correct information. If they have always operated salary sacrifice and advertised the benefits, unless they understand the ruling they may continue to do so. This could
adversely affect the employee. The only way it will be truly curtailed is via education. Whilst our clients will have us to help them with this, those managing their own payrolls may continue to offer schemes and not process in accordance to the legislation. How will HMRC target resources to ensure compliance with the new rules? Samantha: How HMRC targets compliance resources has always been a key question. But as we move towards regional structures and towards an increased use of digital data and automated risk assessment this also puts far greater pressure on employers and their professionals to design and operate robust processes. This is to ensure the accuracy of the core data used in calculations and the onwards processing and reporting of that data whether by P11D or via payrolling. In a year where HMRC are rolling out ‘real time’ tax coding, there has never before been more emphasis on accuracy of employer data. Arguably it is poor timing to be rolling out such a significant new policy that impacts the valuations of benefit code items. Susan: This is not yet clear. However, it is likely that HMRC may cover the compliance aspects as part of a PAYE risk review or, for large employers as part of the regular discussions around processes and policies. We might also expect HMRC to gather data from payroll and P11D returns and use this to target certain sectors. Claire: I expect changes to be made to the real time information specification to include OpRA. These could be used to help identify companies that are not compliant with the legislation. I would also expect more audits to take place. Richmal: HMRC need to ensure that the relevant www.gov.uk pages in relation to the new rules of salary sacrifice are clear, concise and easy to follow. They also need to be clear on the ramifications for employers and employees if the correct procedures are not followed. Recent editions of HMRC’s Employer Bulletin have covered changes to salary sacrifice and it would be ideal if forthcoming editions could also cover the topic to keep it fresh in employers’ minds, so they can take action now or in April 2018 (depending on their situation).
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| Professional in Payroll, Pensions and Reward |
Issue 34 | October 2017
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