COMPLIANCE
and the draft legislation issued later containing the detailed requirements highlights this further. In short, concerns were raised before the Finance Act became law. It received Royal Assent on 22 February, in the last government’s rush before the general election. More generally, the sub-committee commented, “Too often, a consultation begins when it appears that the government has already decided what it wants to do: in those cases, it consults only on how to go about making the changes in question.” Responding and engaging The sub-committee also raised concerns about the length of time it took for the government to clarify to businesses what was required, despite a consultation on the measures going on for a year. In the report, the sub-committee said, “The lack of clarity about the rationale for collecting the additional data, and how this data would be used, caused a great deal of confusion and uncertainty. We struggled to understand what the government was trying to achieve by requiring additional data from employers and individual taxpayers. Additional burdens should not be placed on businesses unless there is a compelling reason to do so.” In short, the witness at the meetings and the submissions made by the profession got across the concerns of employers in this area, showing that responding and engaging in this way can make a difference. Lord Leigh of Hurley, chair of the sub- committee and a chartered accountant, went on to say, “We don’t think [HMRC] has done a proper impact assessment on the time and cost to companies to collect the information that they’re seeking. We’re not convinced that they understand the cost and time that’s going to take for many companies who are frankly focusing on other issues right now.” The government estimated initially that providing employee hours data would cost employers £35 million in one-off set up costs, with negligible ongoing costs, meaning costs of somewhere between £18.25 and £35 per employer. This was adjusted to £58 million one-off costs and £10 million ongoing costs in March 2024, with HMRC having to spend between £5-6 million to change IT to support this and the
other data requirements. A further consultation complaint was that in some cases, the government moved too quickly from initial consultation to full implementation. Complaints were made, even back in 2023, that the deadline for the HMRC data collection requirement was too tight, as the actual detailed requirements would only be published in March 2024. Many voices again expressed continued concern at the requirements, particularly the limited time employers and software providers had to get ready for the changes.
period is determined in several of these ways, the employer should report the total working hours as the sum of the hours for each individual pay element. Driving decisions Perhaps one of the problems from the start (although it was told otherwise) is that HMRC believed this information was already held by employers, as the NMW regulations require records for six years to demonstrate that NMW is paid. However, many employers’ risk assessment of compliance with NMW and the reporting burden on them means that, where employees are paid significantly more than NMW, employers may have taken the view that the information was not required. If it was held, was not in a system that could easily feed into the payroll software. Thankfully, on 15 August these ongoing concerns raised by the profession led HMRC to announce, “Due to delays owing to the general election and the lead-in time required to upgrade software and processes to prepare for implementation, employers will now not be required to start providing more detailed employees’ hours data through PAYE Real Time Information returns from April 2025. This requirement will not apply until April 2026 at the earliest. Final decisions on whether to go ahead with the regulations and any timelines will remain subject to decisions by the new government.” This just goes to show that making your voice heard via your professional institute, or indeed by submitting responses individually, can make a real difference. The greater the number of voices, the greater the impact. Delaying this change – assuming it is ultimately introduced as it may not be – means that employers, software developers and other stakeholders will now have more time to prepare, and we may now also see amended and more suitable measures introduced. In addition, with the new government announcing plans to deliver the most “packed legislative agenda” in decades, we could see lots of future changes impacting the industry. It would be wise therefore for payroll professionals to continue monitoring tax and employment legal consultations and making sure to input comments, whether via the CIPP policy and research team or directly. Your voice matters! n
“Making your voice heard via your professional
institute, or indeed by submitting responses individually,
can make a real difference. The
To recap, the requirement was to report the total number of hours worked by each employee in respect of payments reported in the relevant RTI return. This would depend on how the employee’s pay was determined, including: l if the employee is paid based on an hourly rate, the employer must report the number of hours worked l if the employee is paid based on hours specified in their employment contract, the employer must report the number of hours in that the contract l if the payment to the employee isn’t determined on one of these bases, the employer should report the number of relevant hours as ‘nil’ and, where relevant, specify one of the following descriptions of the payment: ❍ taxable social security benefits (eg statutory sick pay) ❍ payrolled benefits-in-kind ❍ termination payments ❍ payments determined by reference to output (e.g. piece work) ❍ payments made to officeholders (e.g. directors without contractual terms that specify hours). If an employee’s pay in a particular greater the number of voices, the greater the impact”
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| Professional in Payroll, Pensions and Reward |
Issue 104 | October 2024
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