From 31 May 2012, we will introduce a “P35 Interim Penalty Letter” which will be issued over a five-day period, so that it reaches employers within a month of the filing deadline. The letter will state that the employer has incurred a late return penalty and explain what to do to avoid it increasing. We have worked together with the professional bodies on the content of this letter and it has been tested on employers and payroll agents to make it clear and employer -focussed. Improve the online guidance for submitting P35s online, including specific advice about the test-in-live service to reduce the number of employers who believe their test submission is the live submission. The on-screen messages within the HMRC online product will also make it much clearer that even when a successful test transmission has been made, a live transmission is still required. We would encourage those using commercial payroll software (where the text of test/ live messages may vary) to sign up for HMRC’s email alert facility to help them avoid this problem.
Instruct Employer Helpline staff to tell employers about filing dates when setting up new employer schemes, to help them avoid a penalty.
For next year, improve the information on the P35 and the reminders to include a warning that the first penalty notice will cover 4 months.
‘Taken together, these measures should help employers to avoid incurring unnecessary penalties and significantly reduce the number of cases where penalties in excess of £100 are charged.’
SENIOR INDIVIDUALS USING PERSONAL SERVICE COMPANIES TO HAVE TAX DEDUCTED AT SOURCE
11 July 2012
Under proposals in an HMRC and Treasury consultation, senior individuals who are 'controlling persons' will have income tax and national insurance deducted at source even if they contract through a personal services company. The purpose of this consultation is to explore whether this is a necessary and appropriate way of achieving this aim and to test whether the provision is sufficiently targeted and without unexpected detrimental effects. Engaging a worker through a personal service company can be attractive for both the engager and the worker. The engager can save employer's national insurance contributions and the engager also has no requirement for the engager to provide other benefits such as holiday pay, sick pay and pension contributions. The proposals are part of the government’s crack down on tax avoidance as it has come to light that some senior individuals are being paid through a company as opposed to them personally and therefore liable to only corporation tax, which is less than half of the additional rate of income tax. In a parallel development, new tighter rules governing ‘off payroll’ appointments in central government will be brought in this September. This comes after a review of government departments and their arm’s length bodies revealed that over 2,400 key public sector appointees have been engaged off payroll, in some cases for more than ten years. The CIPP will not be issuing a survey to members but would urge any members who are affected by the IR35 rules to respond to this consultation individually. HMRC also intend to hold meetings with relevant stakeholders to discuss the provisions so if you wish to be involved in one of these meetings use the contact details on page 2 of the consultation.
CIPP Policy News Journal
12/04/2013, Page 166 of 362
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