COMPLIANCE
also thanks all attendees for getting involved, having your voice heard and, hopefully, shaping future legislation. Discussing payroll policy at parliamentary level In early November, the chair of the Finance Bill sub-committee, Lord Leigh, invited Samantha to represent the CIPP, and give evidence to the sub-committee on Monday 20 November in the Palace of Westminster. The sub-committee’s oral evidence meeting was centred around the extra data requirements for hours worked. Sam was delighted and honoured to represent our Institute, members and industry on such a poignant topic. The sub-committee specifically asked Sam questions surrounding the challenges payroll service providers may face should the Finance Bill be amended, and RTI processes change. This was fantastic recognition for the Institute supporting payroll professionals working in both a bureau and in an in-house environment. Below, we provide an overview of some of the questions asked, and the CIPP’s condensed stance in relation to those queries. Q: There have been mixed messages from HMRC concerning the purpose of collecting information about employee hours, as this doesn’t seem to have an obvious application for tax purposes. What is your view about how valuable this data will be and the uses to which it could be put? It’s a presumption that people hold this data, as legislation already requires it to be held. But the CIPP knows from the research it carries out that this data isn’t held, nor is it readily accessible. The CIPP mostly agrees, however, that sufficient time needs to be given for payroll professionals (especially those working on behalf of clients) to change their data gathering requirements. Data is invaluable; it’s the basis of multiple calculations including holiday pay and determining if employers are adhering to national minimum wage (NMW) regulations. If shared with other government departments or agencies, it would allow a more holistic compliance approach. Q: Does HMRC need to be more transparent about how this information will be used?
The CIPP and its members want to know how this data will be used. Transparency will get the buy-in from employers and payroll professionals, which is required when making any large change such as this. Buy-in will ensure processes are changed in time for the proposals being enacted, and will increase overall compliance throughout the payroll industry. Q: What would be your view if HMRC decided it wanted to share this information with other government departments or agencies? It would be beneficial to data share. If shared with the Department for Work and Pensions for universal credit (UC) purposes, this could be a solution to incorrect payroll processing, where employers may report the incorrect date on RTI submissions, meaning an individual incorrectly loses their entitlement to UC. Again, with hours worked data, this could be shared regarding NMW compliance. Q: How onerous will it be for employers to provide data about employee hours? The onerous task is the collection of the data, rather than sharing the data via RTI submissions. Software isn’t the issue here; with electronic timesheets and advancements in how workers can ‘clock in and out’, this isn’t the cause for concern. The concern is that change doesn’t come easy, and sufficient time will be required to make these changes, iron out any issues and implement successfully, prior to it being made mandatory. Guidance and clear, sound advice will need to be provided to employers and payroll professionals, to ensure it’s crystal clear as to what data is required and when. Q: What about employers who outsource their payroll? What do the new requirements mean for both the employer and the business providing the payroll service? If these reporting requirements were made mandatory, meaning that not reporting the number of hours on the submissions made to HMRC would result in payroll not going through on time, would bookkeepers and employers make wise estimates, just guessing the number of hours worked to ensure payroll could be processed on time if they didn’t have
the hours readily available to them? That would undo the whole purpose of what we’re trying to achieve. Service providers don’t typically receive the total number of hours worked each pay period. Clients may say, “pay (name) £1,000 this month”, but there are no hours given, so the provider could be essentially plucking a figure out of thin air and including it on the RTI submission just to get payroll processed. This is especially true if there’s a requirement to record hours worked for individuals paid weekly or hourly. Our members were also concerned that their clients wouldn’t be very forthcoming with the information unless they knew specifically what this data was going to be used for. Service providers may need to change their data-gathering processes. It’s not just about what the system needs; it’s the whole process when taking on a new client. When a new client signs up, the provider will need to make them aware of the information it needs from them. This process change could take time to develop and implement, and could have financial implications. We stress again that sufficient time needs to be given to implement this in a successful manner. From a business perspective, people need to know why this information is being requested. They may need more investment. They might not want to use a legacy piece of payroll software and may wish to go out to tender and look at new software providers. This is time and cost that the business then obviously needs to pick up. Support and guidance really need to be given here to explain the new requirements and to get employers’ buy-in.
Q: The details of the reporting requirements will not be known
until draft regulations are published. What consultation do you consider necessary and how realistic is a start date for implementation of 2025? The CIPP would like to see pilots run, and believes the challenges will be greatest in an outsourced environment. The CIPP suggests an implementation of no earlier than April 2025, in line with the new tax year. You can access the full transcript of the Finance Bill Sub-Committee meeting here: https://ow.ly/mxc650QgQns.
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| Professional in Payroll, Pensions and Reward |
Issue 97 | February 2024
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