Official publication of The Chartered Institute of Payroll Professionals
Issue 76 December 2021 – January 2022
How payroll can make a strategic contribution
Christmas considerations What should employers take note of over the festive period?
Payroll in 2022 Start planning for the new year with our guide to future changes
Hello from HMRC Updates regarding debt collection and the Taxpayer Protection Taskforce
CIPP UPDATE POLICY HUB PERSONAL DEVELOPMENT
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“A vision without a strategy remains an illusion” Lee Bolman
Editor’s comment For many people, Christmas signals a well-earned break and time to spend with family and friends. However, thousands of payroll professionals will first be turning their attention towards getting that December pay run
embroiled in for not paying his elves correctly! Also, be sure to read through articles from Her Majesty’s Revenue and Customs that discuss its future approach to debt collection as we return to normality following the pandemic, and read about the work carried out by the Taxpayer Protection Taskforce, across pages 46 and 47. Happy Christmas and new year. Here’s to Professional magazine in 2022!
over and done with before they can relax. Many organisations opt to bring pay dates forward and bestow additional gifts on their staff (see page 22 for more on that). And it is highly probable that there will be a much shorter time frame in which to get the payroll processed in its entirety as the festive period approaches. Flick to page fifteen to read the scandal that Santa is currently
Lora Murphy ACIPP (editor@cipp.org.uk) Editor
Chair’s message
Looking beyond the fundamental requirement of paying employees accurately and timely, most payroll professionals influence their employer’s strategy due to the huge amount of valuable
Providing data on absences, sickness and overtime can help organisations to pinpoint problems within the workforce and make informed decisions in any future planning. Calculating the costs of benefit provision and proposed alternatives or additions is another area where payroll can make a strategic contribution. The largest factor, of course, which will impact on all the above (which are a few examples only) is when there are increased costs to consider for changes in legislation, or announcements made in the Budget. The newly announced health and social care levy provides a good recent example of this.
data they have at their fingertips. Calculating the cost of the payroll department and the cost per payslip is a necessary contribution. For in-house payrolls, it is to demonstrate that the department is providing value to the organisation, whereas for payroll bureaus, it is to evidence the value of the service against the competition. It is also critical for any organisation planning to invest in a new payroll system or reviewing the value of its current system. Budgeting assists the organisation with knowing how much their people costs will be and how much any fluctuations in staffing will amount to. This could be due to planning salary increases, to cut costs to make efficiencies, because of lean times, or to increase staffing levels due to growth or specific projects.
Liz Lay MSc FCIPPdip FHEA ACIPD (liz.lay@cipp.org.uk) Chair, CIPP
CEO’s message
I recollect, this time last year writing, “What a year! I’m sure it’s one which we will not forget, personally or professionally.” I would never have thought that, as we approach the
the graduates, along with their friends and families, and to join them in celebrating their achievements. There were still some events that we ran virtually this year – The Annual Conference and Excellence Awards was one of them, and was a great success, with keynote speaker Eddie ‘the Eagle’ Edwards proving very popular with delegates, while Clare Balding successfully and professionally presented the Awards. Finally, on behalf of all the staff and board here at the CIPP, I wish you all a well-deserved break over Christmas and new year. May it be spent with family, friends and loved ones. Continue to keep safe and well.
end of 2021, the same message remains. My crystal ball wasn’t working when I said at the end of last year that I hoped 2021 would be the time when we got together for the Annual Conference and Excellence Awards at the Celtic Manor Resort. Hopefully, we can celebrate our profession in-person in 2022. We held some of 2021’s National Payroll Week face-to- face, and my recollection of the kick-off event was the amazing atmosphere in a room full of more than 100 attendees – it was a wonderful feeling. We also held a ‘double’ graduation celebration at Symphony Hall, in Birmingham, to celebrate the classes of 2020 and 2021, and to recognise their success. As usual, it was fantastic to see all
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
in Payroll, Pensions & Reward PROFESSI NAL Contents December 2021 – January 2022
Also available online at professionalmag.co.uk
THIS ISSUE’S FEATURE TOPIC HOWPAYROLL CANMAKE A STRATEGIC CONTRIBUTION
Features
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13
14
Cornavirus job retention scheme: It ain’t over till it’s over By Justine Riccomini
Organised labour fraud and due diligence By HMRC’s Fraud Investigation Service
Payroll processing in a bureau environment By Sarah Crace
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16
18
Is off-payroll working working? By Duncan Groves
Santa scandal By Lora Murphy
Payroll in 2022 By Samantha Johnson
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21
22
Statutory sick pay and Covid-19 By the CIPP policy and research team
The evolution of employee benefit systems and data By John Deacon
‘Tis the season to be giving By Gemma Mullis
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26
How can payroll support employee financial well- being this Christmas? By the CIPP policy and research team
The intricacies of dismissal and discrimination By Nicola Mullineux
Perks of the job By Tim Kelsey
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 2
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Editor Lora Murphy 0121 712 1018 | lora.murphy@cipp.org.uk Advertising Daniel Cull 0121 712 1021 | advertising@cipp.org.uk Design James Bartlett and Nicole Davis design@cipp.org.uk Printing Warwick Printing Company Ltd
Part-time working claims on the increase: What employers need to know By Danny Done
Flexible working requests – the ‘domino effect’ for payroll By Mathew Akrigg
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33
Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Louise Gray ChMCIPPdip
Leaders vs. managers (and why being paid is not enough) By John Cronin
What you need to know about pension transfers – today! By Henry Tapper
Stuart Hall MCIPPdip Helen Higson ACIPP Dianne Hoodless MSc ChFCIPP FHEA Liz Lay MSc FCIPPdip FHEA ACIPD Jeremy Montgomery BA(Hons) FCIPP
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Carole Pearson MCIPP Katie Sharpe MCIPPdip
Cliff Vidgeon BA(Hons) CMA ACG ChFCIPP Clare Warrington MSc FCIPPdip AFHEA
Useful contacts
How payroll can make a strategic contribution By Daniela Porr
The strategic value of payroll By Jerome Smail
Education education@cipp.org.uk 0121 712 1023 Events events@cipp.org.uk 0121 712 1013 General enquiries enquiries@cipp.org.uk 0121 712 1000 Marketing and sales marketing@cipp.org.uk 0121 712 1033 Membership membership@cipp.org.uk 0121 712 1073 Training training@cipp.org.uk
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Hot topic –How HMRC is collecting debt following coronavirus By HMRC
Hot topic – The work of the Taskpayer Protection Taskforce By HMRC
Regulars
0121 712 1013 cipp.org.uk @CIPP_UK
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21 Reward 34 Industry news 36 Feature topic 41 Wordsearch 46 Hot topic HMRC update 48 Confessions of a payroll manager
Editor’s comment, and Chair’s andCEO’smessage
04 CIPPupdate
Events, news and developments
Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2021. The Chartered Institute of Payroll Professionals, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.
05 My CIPP On your behalf, Advisory, Spotlight on 10 Personal development BePayroll
11 Payroll news 12 Compliance
Full issue including additional online content available at professionalmag.co.uk
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
CIPP update
BeConnected: National Forums – upcoming dates IT’S TIME to start thinking about our BeConnected: National Forums again. We’ve just released the dates for the upcoming events, so take a look at the list below and book your place to make sure you don’t miss out. The BeConnected: National Forums are a great way of keeping your skills and knowledge up-to-date and for networking with your peers in the industry. Best of all, they’re free to attend. So make sure you don’t miss out on this great membership benefit. Book your place online at www.cipp.org.uk/events .
Date
Time
Location
Date Location 28 February 2pm – 4pm Virtual 03 March 9am–1pm Belfast 04 March 9am–1pm Edinburgh Time
Date Location 08 March 9am–1pm Birmingham 15 March 1pm – 5pm Bristol 17 Mar 10am–12pm Virtual Time
1 February
9am–1pm London
8 February 9am–1pm Newcastle 17 February 9am–1pm Manchester
Training THE HIGHLY regarded payroll update course is coming to a city near you. Between February and the start of the new tax year is the perfect time to make sure you’re ready for any changes taking place. This course is extremely popular, so we have added in more locations and dates for you to choose from. You can of course choose to take the course online too. Take your pick from the dates below and book online at: http://ow.ly/rJah30s20ct, or email enquiries@cipp.org.uk to book your place.
Qualifications THE FOUNDATION Degree in Payroll Management is now open for spring enrolment, as is the Recognition of Prior Learning (RPL). If you have over two years’ experience in payroll, are competent in manual calculations or have successfully completed the Payroll Technician Certificate, you may be able to complete the RPL assessment and move straight onto year two of the Foundation Degree. For more more information, you can visit cipp.org.uk/study or email enquiries@cipp.org.uk , and they can discuss your options with you. Enrolments for the RPL assessment are taking place on:
Date Location 09 February 2022 Manchester 17 February 2022 Online 28 February 2022 London 02 March 2022 Online 04 March 2022 Birmingham 10 March 2022 Cardiff 11 March 2022 Belfast
Date
Location
14 March 2022
Online
16 March 2022
Glasgow
● 5 January ● 2 February ● 2 March
17 March 2022 Leeds 23 March 2022 Manchester 24 March 2022 Bristol 28 March 2022 Newcastle 29 March 2022 London
The student loan enrolment deadline for the Foundation Degree is 18 March 2022, whilst the general deadline is 29 April 2022.
Congratulations to the newly accredited PAS organisations
Anita Eke ACIPP – a tribute WE HAVE received the sad news that one of our CIPP members has passed away. Anita Eke was an associate student member, who was studying the Foundation Degree in Payroll Management. Anita had been studying to get more qualifications but after a short battle with cancer, sadly passed away peacefully in her sleep. Our thoughts and condolences go out to Anita’s husband, Ray, and her friends and family. Chartered members THE CHARTERED Institute is pleased to announce the following individuals have recently gained Chartered membership status: ● Samantha Johnson LLB(Hons) MCIPPdip , policy lead at the CIPP ● Tracey Marney ChMCIPP, payroll manager at Countrywide Estates ● Juliet Clark ChMCIPP, payroll accountant, NEX Services at CME Group. Congratulations to you all.
THE CIPP’s Payroll Assurance Scheme (PAS) is designed to test payroll processes in relation to payroll processing and compliance, along with people skills and development opportunities. One of the most important elements is ensuring business continuity plans are in place and effective, should they be required. Congratulations to all organisations that have achieved this accreditation and been able to put those plans into action, given the events of the past eighteen months. Special congratulations to our recently accredited organisations: ● Domestic & General Group Limited ● Zellis. Ken Pullar, CIPP chief executive officer, said: “Never has it been more important for businesses to have good payroll processes, knowledge and skills that enable them to implement new government legislation and guidance quickly. Congratulations to those organisations that have recently demonstrated just that.” The PAS is still operating, with assessments currently operating virtually. To find out how the PAS can benefit your organisation, email compliance@ cipp.org.uk.
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 4
O N L I N E L E A R N I N G
Policy hub
Policy hub
On your behalf
Learn how to process a number of common termination packages correctly, from redundancies to contractual breaches, retirement and death-in-service. Termination payments
The CIPP’s policy and research team provides an update on developments, and the activities they have been involved in Policy teamupdate
F irstly, the policy team wanted a happy new year. Like 2020, 2021 has been a year full of hurdles and challenges, and the payroll profession has been kept extremely busy. You have all handled substantial changes at a rapid pace and ensured that employees were paid both on time and accurately. It has been our pleasure to keep you up to date on the substantial changes that are afoot – from announcements regarding the health and social care levy to the whopping 6.6% increase to the national living wage from 1 April 2022. to take the opportunity to wish everybody a merry Christmas and The team has been busy with a variety of events as things continue to return to normal, but also with planning activities for next year. We can’t wait to share news of some of the exciting projects we have in store for you… Graduation ceremony On 5 November, the CIPP hosted not one, but two, graduation ceremonies at Symphony Hall in Birmingham. Our very own policy and research officer – Gemma Mullis – was one of those celebrating completing her Foundation Degree in Payroll Management, and she may have got a (deafening) cheer or two from the team. It was a fantastic day and so amazing to see everyone face- to-face getting the recognition that they deserved for all their hard work. Please see the supplement accompanying this issue of the magazine for further details surrounding the big day. Events It felt like November was jam-packed with events, just how the policy team like it! On 8 November, the policy team hosted a meeting with the National Audit Office, to explore the impact of the
implementation of the off-payroll working reforms in the public sector. Then, on 11 November, Samantha Johnson and Mathew Akrigg travelled to London, to the illustrious Gherkin building for Pay Dashboard’s Payroll Services Summit. Sam presented an update on the health and social care levy. It was a great opportunity for the team to network and speak to payroll professionals. Finally, on 17 November, Mat hosted a BeKnowledgeable webinar on the topic of statutory absence payments, which more than 650 people signed up to. The last BeKnowledgeable of the year will take place on 14 December 2021and will cover every payroller’s (least!) favourite topic – overpayments. Surveys The CIPP runs three ongoing reports. They are the: ● Payslip Statistics Survey ● Benchmarking Survey ● Future of Payroll Survey Work is currently underway to ensure that the surveys are as relevant and up to date as possible, and to try and fit them in more conveniently with the schedule of payroll professionals. Also, keep an eye out for reports relating to the survey that we recently ran for Western Union Business Solutions on the topic of international payments, and the Moorepay survey which sought to gain a greater insight into the payroll industry’s knowledge of faster payments. ‘Tax Day’ At the time of writing, the policy team are eagerly awaiting ‘Tax Day’, which will take place on 30 November. By the time you are reading this, we will have put out any information from the occasion that will impact the current, and future, work of payroll professionals. n
Visit cipp.org.uk/training to book your place
CPD 3 points
5
| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: We have a situation where an employee has been sick for over a week. Our client has been unable to contact this individual and has been unable to obtain a medical certificate. Can we withhold payment of statutory sick pay (SSP) until a medical certificate is received? A: Her Majesty’s Revenue and Customs (HMRC) advises that employees must inform their employer they are unable to attend work due to illness before the date stated in company policy, or within seven days, if there is no company deadline. SSP can be withheld for any day prior to notification being given if there is no valid reason as to why the employee has not notified you.
Guidance goes on to state that where notice has been given, an employer cannot withhold the payment of SSP if the medical certificate is late in arriving. We would advise that you write to your employee requesting medical evidence and asking them to submit this within an agreed deadline. You could also ask them to contact you to explain why the evidence is late. In the meantime, SSP should continue to be paid until the deadline date has arrived. If no medical evidence has arrived by the deadline, stop payment of SSP and pass this issue to your human resource (HR) team, as they may then regard this as unauthorised absence. For reference, see: https://bit. ly/3mCzH4E. Q: My client operates a relief at source (RAS) pension scheme. An individual, who is a higher rate taxpayer, is concerned that he is not receiving the correct tax relief in his pension fund as the scheme only reclaims 20%. How would he apply for additional tax relief on his contributions? A: RAS pension schemes are those that mean tax relief is claimed by a pension scheme administrator after the contribution is taken from net pay. This means that pay as you earn (PAYE) is operated on the full amount of the employee’s pay. The employer then pays the contribution over to the pension fund and the pension scheme administrator claims back basic rate tax relief from HMRC. It is not tax relief given through PAYE at the point of paying the employee. To obtain additional tax relief, higher
rate taxpayers can submit an annual tax return. Tax relief may also be claimed by contacting HMRC. A tax adviser would be beneficial in scenarios such as this to assist in the completion of the tax return. Q: My client has just discovered that two employees shared a company car in tax year 2020/21. We have received requests to submit amended form P11Ds, but we are unsure how this is calculated and reported on form P11D. A: Section 148 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) discusses the reduction of the cash equivalent of a company car when it is shared between employees of a business. The car benefit is treated as taxable earnings as in normal circumstances and then apportioned between each employee on a just and reasonable basis, with the employee who had most use of the car receiving the higher cash equivalent figure. The cash equivalent must then be reported in box nine of section F of form P11D. Employers are advised to ensure the ‘manual’ cash equivalent figures equate to the total cash equivalent for that car. Attach a letter to form P11D explaining the company car is shared and how the pro-rated calculation was arrived at. For reference, see: https://bit. ly/2YdNxB6. Q: Our HR department has requested that we deduct a pre-agreed £10 net deduction from employee wages to help cover the cost of the Christmas party. The £10 cost is an entry ticket to
Employees should advise their employers they are off sick within certain timeframes, and also provide relevant documentation when required.
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 6
O N L I N E L E A R N I N G
Policy hub
The overpayment of remuneration to employees can occur for many reasons. The rules governing the right to reclaim overpayments are complex and must bemanagedwith caution. This course clarifies the impact of relevant case law and statutes and identifies the practical considerations for reclaiming overpayments using group discussions and exercises to create an interactive learning environment. Overpayments recovery workshop
the party. Are we allowed to do this? A: Section 13 of the Employment Rights Act 1996 states that a deduction from wages is only lawful if there is either a statutory requirement to make the deduction, a clear clause in the employee’s contract allowing for the deduction, or if the employer obtains the employee’s express written authorisation. This would not be a statutory deduction, so unless it is already clear in the employee contracts that the deduction will be made, you will require additional written permission to deduct. As well as this, regulation 12 of the National Minimum Wage Regulations 2015, states that: “12.— (1) Deductions made by the employer in the pay reference period, or payments due from the worker to the employer in the pay reference period, for the employer’s own use and benefit are treated as reductions” As the money will be used to reduce the employers’ costs, we strongly advise caution if these deductions are made as it may trigger national minimum wage compliance issues. For reference, see: https://bit.ly/3GUzlyv. Q: We have recently had a request from a member of staff requesting for their preferred name to appear on their payslips. Please can you confirm whether preferred names can be used when reporting under real time information (RTI)?
name is shown on payslips but does not reflect in the RTI reports. If your software does not have this capability, then you will have to refer to the employee’s full forename for all internal reporting. Q: Our client wishes to pay December payroll early this year. We struggle with this each year. When must the full payment submission (FPS) be submitted? Is it at the time of payment or on their usual payday? A: Since 2019, there has been a permanent easement for reporting information in real time when employees receive their pay earlier than usual at Christmas. HMRC has provided a reminder of this very issue in the October 2021 issue of the Employer Bulletin . If employers do intend to pay early in December, it is vital that they report their normal contractual payday on the FPS. “Doing this will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.” For reference, see: https:// bit.ly/3GMZNtQ. Q: We have awarded non-cash vouchers to employees as a reward for services. We are aware they must be processed through payroll for class 1 National Insurance contributions (NICs) and reported on form P11D for tax as this is regarded as a benefit in kind. However, we do not understand why class 1NICs are due on the voucher – why not class 1A alone? A: Section 3 (1) of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992) states that earnings for the purpose of NICs are “…any remuneration or profit derived from an employment…” HMRC also states that the definition of earnings for NIC purposes includes “… salaries, wages, and other forms of reward such as bonuses, commission, tips, etc…” As the voucher is presented as a form of reward, it is regarded as earnings derived from employment and, as such, will be liable to class 1 NICs for both employee and employer through the payroll. The voucher must be reported by the employer, for tax only in section C of form P11D or payrolled for tax if an employer has formally agreed to payroll their benefits with HMRC. For reference, see: https://bit.ly/3CGseXA. n
Visit cipp.org.uk/training to book your place
A: When reporting under RTI, the forename must be their full name,
CPD 3 points
must not be shortened or include any nicknames. Depending on the payroll software, you may have a specific field that can be populated to reflect the employee’s preferred name. The software could be configured so that a preferred
Does an individual’s full name have to be used for RTI purposes?
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
MY CIPP
Spotlight on...
The CIPP events team : Lynne Rocks, Sarah Jones, Megan Dudley and Rachel Wheeler
Can you describe the events team for us – who are they, what do they do and what are their backgrounds? Lynne Rocks is the events manager and is responsible for delivering all of the CIPP’s events and training courses with the support of the events and training team – Sarah Jones, Rachel Wheeler and Megan Dudley. Sarah, senior events and training coordinator, leads on working with our sponsors and managing our relationships with venues. Sarah keeps us all on track with checklists and her eye for detail. Megan and Rachel are our events and training coordinators. Rachel focuses mostly on the CIPP’s training courses and works very closely with our trainers. If you have attended a training course, it’s likely you will have been in touch with Rachel. Megan is our technical whizz. She builds all our platforms for events, webinars and award nominations. Meg enjoys putting the finishing touches to events, such as picking decorations for the awards ceremony and selecting menus. Do you all have a favourite CIPP event to either organise or attend? We’ve been debating the answer to this question all morning! We’re split between the Annual Conference and Excellence Awards Ceremony, and graduation. The Conference and Awards are definitely
the most difficult to arrange, but we all love seeing everyone coming together and enjoying the event. Plus, the glitz and glamour of the Awards Ceremony is a highlight of the year. We all also love the graduation ceremony. It’s a day filled with emotion, and we are lucky enough to be backstage sharing the moment with graduates before and after the walk across the stage. It’s a real honour to celebrate the graduates’ achievement and lovely to meet the families and friends who have supported them through their qualification. What are the main priorities of all your roles and how do they fit together? We are a small, busy and supportive team. Whilst we all have our own areas to lead on – Lynne on strategy and scheduling, Sarah on sponsorship and venues, Rachel on training and Megan on day-to-day coordination of events – we all work very closely together and help each other a lot. Overall, our priority is that anyone who attends one of our events or training courses has a great experience and we are all focused on making that happen. What do you think you and your team can bring to the future strategy of the CIPP? Events are an integral part of how the CIPP stays in touch with its members. We provide opportunities to learn through
training and events, to connect and network with others, and to celebrate achievement. We are always looking to improve and innovate so our events and training stay fresh and modern. Look out for some exciting changes in 2022… What does the future hold for the CIPP’s events? We are all really excited about getting back to face-to-face events in 2022. We have all really enjoyed learning about online events (and it was a fast learning curve after the pandemic hit), but we have missed the interaction with members and the excitement of live events. Look out for our BeConnected: National Forums coming to a city near you in early 2022, plus the Annual Conference and Exhibition and Annual Excellence Awards at the Celtic Manor Resort on 5 and 6 October 2022. We’re also really excited to be further developing our online events with the BeKnowledgeable webinars and National Payroll Week online events. What do your roles mean to you? Our roles mean that we get to meet lots of CIPP members and others working in the payroll, pensions and reward industry. It’s great to be involved in such an energetic and passionate industry where we get to use our event management skills creatively and really feel like our work is making a difference. n
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 8
Payroll update Coming to a city near you
CONTAINS UPDATED INFORMATION FROM THE AUTUMN 2021 BUDGET
UPCOMING DATES 09 February 2022 : Manchester 17 February 2022 : Online 28 February 2022 : London 02 March 2022 : Online 04 March 2022 : Birmingham 10 March 2022: Cardiff 11 March 2022 : Belfast 14 March 2022: Online 16 March 2022: Glasgow 17 March 2022: Leeds 23 March 2022: Manchester 24 March 2022: Bristol 28 March 2022: Newcastle 29 March 2022: London
ONLY £192+VAT* FOR MEMBERS
CPD 7 points
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| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 9
RSONAL DEVELOPMENT
# Be Payroll
Emma FarrowACIPPdip, head of payroll and pensions at Citizen talks through the perks of holdingmembershipwith the CIPP
Why did you choose to become amember of the CIPP? I wanted to take control and responsibility of my own self development within both payroll and pensions. I knew that being a member had many benefits that I could use to enable me to continue to build on my knowledge as a payroll professional. Professional magazine and the Advisory Service are fantastic tools and I use them all the time. How has your membership helped you in your career? Being able to increase my knowledge has naturally helped me to progress to the level I am at today. The insights and knowledge you gain from the CIPP are invaluable and make me feel more confident. I always feel reassured when I read or research a topic through the CIPP that we are doing things correctly. My membership has played a big part in this, as the CIPP is quick to communicate changes in rules or legislation, which allows me to communicate effectively and efficiently within my organisation. What membership benefits have you used or enjoyed the most and can you give me some examples? I look forward to reading Professional magazine and the newsletters that are circulated from the CIPP, and I can honestly say that I get so much insight from these tools alone. I am also a big fan of the Advisory Service, especially when I cannot get through to Her Majesty’s Revenue and Customs (HMRC). Additionally, I have benefitted from discounted training sessions, and attended training on off-payroll working. Can you describe your payroll journey to us so far? Like everyone else, I ‘fell’ into payroll. I started my career in payroll following the birth of my first child and, at the time, I was working in the travel industry which did not provide me with the work/life balance I needed. It was because of this that I went looking for a nine to five job. In 2001, I joined a large catering company and my first role involved taking incoming calls from employees and following scripts to either divert their calls to the relevant teams, or to answer standard questions. Two days in, I got thrown into inputting timesheets and never looked back. I quickly learned I thrive on pressure, so in 2003, I took the leap of faith and moved to a payroll bureau. I absolutely
loved the fast-paced environment and the variety of work, not to mention the amount of experience I gained within just two years. I quickly learned that not one payroll was the same. I loved working with clients and finding solutions to their complex issues. Getting an insight into business operations has played a huge part in shaping my career. I took redundancy in 2005 and this felt like the right time to move into payroll management. Eighteen months later, my third child was born, and at the same time, we set up a family business, so I took some time off to stay at home to raise my children and support my husband to grow the business. In 2011, I felt it was the right time to kickstart my career again and moved around part-time payroll and human resource (HR) roles as this enabled me to complete the school run, whilst rebuilding my knowledge. In 2015, I felt I was ready to commit to a full-time role and moved back into payroll management. I’ve stayed there ever since. What are your hopes for your future career? I would love to see payroll leaders being represented at a more senior level as I think involving payroll in business strategies will help organisations to make more informed decisions. I am passionate about continuous improvement and extremely ambitious, so who knows where my career will take me, but I like to think there is room for further career progression. Do you have any plans to study any CIPP qualifications or training courses? I completed the CIPP Foundation Degree in 2019 and have considered starting the Master of Science (MSc) in Strategic Management. Now is not the right time for me but it is part of my five-year plan. What advice would you give to those new to the payroll profession who are just starting out in their careers? Be curious, keep generating questions and asking why. Although payroll is governed by legislation, this does not mean you cannot be creative and improve your skills to become more effective and efficient. n
If you are interested in being featured in the BePayroll series, please email marketing@cipp.org.uk .
Be Knowledgeable . Be Developed . Be Recognised . Be Supported . Be Connected .
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 10
Payroll news
Payroll news
Tax Day – Autumn 2021 AT THE time of writing, we are awaiting news from the government in regards to its future tax administration and maintenance plans. This has been dubbed as a second ‘Tax Day’ and will be similar to the one held on 23 March 2021, following the March Budget. It was held on 30 November 2021, and the CIPP’s policy and research team will have covered any key announcements for payroll professionals to be aware of. The associated news story can be located here: http://ow.ly/xrvA30s1HC6. New director of labour market enforcement (DLME) appointed MARGARET BEELS has been confirmed as the new DLME in a news story published by the department for Business, Energy and Industrial Strategy – http:// ow.ly/7F9C30s1HrV. Margaret will lay out the strategic direction for three existing labour market enforcement bodies: ● the Employment Agency Standards Inspectorate ● the Gangmasters and Labour Abuse Authority (GLAA) ● HMRC’s NMW team. Margaret, who has been the chair of the GLAA since 2011, will be assessing the scale and nature of non-compliance in the labour market, aiming to ensure that workers are both paid and treated correctly. The appointment will hopefully lead to additional information relating to the single enforcement body, which will see the three labour market enforcement bodies combined. Matthew Taylor previously held the role of interim DLME from August 2019 to January 2021.
Real livingwage rates announced TO KICK off ‘living wage week’, the Living Wage Foundation confirmed the new real living wage rates on Monday 15 November 2021. The real living wage is calculated based on the cost of living and is paid voluntarily by almost 9,000 employers. It is separate from the national minimum wage (NMW) and national living wage rates set by the government, which have to be paid by law. The figures are now £9.90 per hour across the UK, except for London (where it is accepted that the cost of living is higher), which is set at £11.05 per hour. Employers should implement the rise as soon as possible, but this must be done within six months, to ensure that they retain their living wage accreditation. This means that the new rates should be in place by no later than 15 May 2022. The Living Wage Foundation website can be accessed here: http:// ow.ly/WsUX30s1Hz2. Agent Update 90 released HER MAJESTY’S Revenue and Customs (HMRC) has released issue 90 of its Agent Update , which is aimed at tax agents and advisers with the purpose of providing them with the latest news and guidance. This issue includes articles that cover: ● a summary of the Covid-19 support schemes ● declaring coronavirus grants on tax returns ● UK-Swiss convention on social security ● self-assessment ● additional information on new Freeport sites ● value added tax reverse charge for construction and building services ● reporting changes to working hours for working tax credits ● making tax digital ● HMRC Agent Services. It can be accessed in its entirety here: http://ow.ly/NEIc30s1HGi.
Diary dates
Last day for submitting a real time information employer payment summary to apply to tax month 8 Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by non-electronic method
19 December
22 December
Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by electronic method
5 January
Last day of tax month 9
6 January
First day of tax month 10
Last day for submitting a real time information employer payment summary to apply to tax month 9 Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by non-electronic method
19 January
22 January
Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by electronic method
5 February
Last day of tax month 10
6 February
First day of tax month 11
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
COMPLIANCE
Organised labour fraud and due diligence
Her Majesty’s Revenue and Customs’ (HMRC’s) Fraud Investigation Service discusses its biggest threats, whilst providing guidance to protect yourself frompayroll company fraud
The payroll company pays the staff but fails to remit the income tax, NICs and VAT to HMRC
Unprecedentedchallenges The last eighteen months have seen
businesses face unprecedented challenges. As they look to rebuild, some may be tempted to cut costs to maintain profit margins. It is these sorts of conditions that criminals can look to exploit. The National Crime Agency’s 2021 National Strategic Assessment – http://ow.ly/ yOBi30s0Hrw – showed that the threat from organised crime has ‘proved resilient in the face of Covid-19’. One area criminals seek to infiltrate and exploit is the supply of labour. HMRC recognises that organised labour fraud (OLF) poses a significant risk. OLF is a supply chain fraud, and the name signifies two main things: ● it is ‘organised’ because the frauds are orchestrated and carried out by organised crime groups ● it is ‘labour fraud’ because it always involves a genuine supply of labour from a fraudulent entity or entities. In OLF, the taxes in relation to the supply are either suppressed or evaded altogether. One such example of this is payroll company fraud which, in its simplest form, occurs when a business transfers staff, along with payroll responsibilities, to a fraudulent entity (purporting to be a payroll company) which then supplies the staff back to the business, at a cost roughly equivalent to gross wages plus value added tax (VAT). The payroll company pays the staff but fails to remit the income tax, National Insurance contributions (NICs) and VAT to HMRC. Please see the October 2019 issue of Professional for further information: http:// ow.ly/39p330s0HwF. The impacts of this type of fraud are significant and wide reaching, including on: ● the exchequer – money is not paid to fund vital public services ● workers – affecting employment rights and other entitlements, such as pensions and benefits ● the labour recipient – this could have serious reputational impacts and may even affect their ability to operate.
As businesses attempt to source an affordable supply of labour, opportunities arise for criminals to exploit. With offers of savings that are literally too good to be true, criminals can adopt a very professional front, employing sales techniques that make it difficult to resist. They often, but not always, target businesses that are in a weak financial position.
the disallowance of input VAT in relation to the supply. Exploitation, fraud and avoidance are easier to hide below the surface of a supply chain when effective due diligence is not performed by all parties. Therefore, checks done purely in relation to immediate suppliers and customers may be insufficient. Margins become tighter with every layer of subcontracting and opportunities increase for fraudulent infiltration of supply chains. One aspect of a contractor’s due diligence activities should include ensuring they have a good understanding of the supply chain structure, including the entities involved and any changes in supply. Additionally, suppliers may advise that they operate ‘tax efficient’ schemes. Contractors should be aware that, although these may seem plausible on the surface, the underlying operating model could actually be fraudulent or evasive. n Useful links HMRC’s guidance about supply chain due diligence can be found on GOV. UK: http://ow.ly/gcr430s0Hy4. For outsourced payroll services, an online portal is available on the GOV.UK website for the engager to voluntarily report it. It can be found here: http://ow.ly/orqs30s0Hyp. This gives HMRC visibility of who is being engaged, so it can act if there are issues. If you have information or concerns about a supplier or engager of labour and associated activities, you can contact HMRC’s hotline online or by telephone on 0800 788 887.
Howcanbusinesses protect themselves?
If services such as labour supply are being outsourced, or an umbrella company is in place, HMRC recommends applying supply chain due diligence principles of ‘check, act and review’. This will allow a business to apply effective risk management and robust due diligence to assure the integrity of supply chains, minimising exposure to risks. So: ● check – know the risks; legal, financial, tax and the social obligations of suppliers ● act – carry out robust due diligence on suppliers and act to mitigate or remove risks ● review – effective due diligence requires continuous monitoring and review. Applying these principles will allow for judgement to be made on transactions, and the integrity of supply chains. It will also protect businesses by testing the credibility, legitimacy, legal and tax compliance of suppliers, supplies, customers, employees and labour supply. Contractors should be aware that, in most cases, HMRC does not consider there to be any genuine financial benefit to long supply chains and these should be treated with caution where they are discovered. Failure to undertake sufficient due diligence checks can have serious financial impacts for the business, such as
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 12
Compliance
Coronavirus job retention scheme: it ain’t over till it’s over
Justine Riccomini MSc FFTAAIPACharteredMCIPDChFCIPP, head of taxation at the Institute of Chartered Accountants for Scotland provides an overviewof Her Majesty’s Revenue and Customs’ (HMRC’s) interpretation of coronavirus job retention scheme (CJRS) claims and how underpayments can be offset against overpayments
employers and agents, but without any publication of a government policy statement, it has not been possible to publish guidance on this issue until now. There have been discussions centred on what would happen at the end of the scheme Meanings and interpretations Another main topic of discussion at the CJRS forum has been the subject of offsetting overclaims and underclaims against each other for any particular claim – which then led on to discussions around the definition of a claim. HMRC’s original conclusion was that a claim was per employee, not per pay period, which could have had widespread implications for employers, as well as for auditors preparing statutory accounts, and corporate finance professionals handling due diligence exercises for mergers and acquisitions transactions. Following a letter sent by a collective of professional bodies to HM Treasury and HMRC to formally dispute HMRC’s interpretation of the definition of a claim and the position on under and overclaims, HMRC changed its stance on the definition of a claim and published guidance to agree with the stance taken by the professional bodies on 11 October 2021. What is a ‘CJRS claim’? HMRC’s published guidance states: “When working out the amount you’ve overclaimed for in a claim period, you can include all employees in that single claim period.
This means if you’ve overclaimed for one employee, you can offset this by an amount, equal to any amounts that you’ve underclaimed for another employee included in the same claim period. You cannot offset an overclaim made in one claim period against an underclaim from another claim period. Where you have underclaimed for any employee, you must make that value good to the employee. This is because it is a requirement of the Coronavirus Job Retention Scheme that the employee receives a minimum of 80% of reference pay. You must repay any balancing overclaim after offsets for any period to HMRC. Example of offsetting an amount you’ve overclaimed A Ltd claimed £4,000 for 1 June 2021 to 30 June 2021. This comprised of £2,000 for Employee 1 and £2,000 for Employee 2. A Ltd reviewed the claim after the amendment deadline and identified that Employee 1 should have received £2,500 and Employee 2 should have received £1,500. The £500 overclaim for Employee 1 can be offset against the £500 underclaim for Employee 2. This means A Ltd does not have an overclaim for the period from 1 June 2021 to 30 June 2021 as long as they pay Employee 1 the additional £500 they should have received in respect of that period.” The guidance can be located here: http://ow.ly/AQJk30s10vT. Conclusion It is certainly a relief that HMRC has changed its interpretation; but care still needs to be taken by employers to ensure their claims are correct, as a compliance review programme is currently underway in respect of CJRS. n
I n the Spring of 2021, HMRC set up a CJRS forum, comprising of approximately eighty stakeholder participants who have expertise in CJRS legislation, policy and claims. The meetings take place once a month, with ad hoc additional meetings as and when necessary to deal with any emergent issues. You may wonder why the CJRS forum was not established until spring 2021. No concrete answer has been provided, but essentially tax and payroll policy experts from all around the UK were involved in an informal forum throughout March 2020 to May 2021, with dialogue taking place on a near-daily basis to facilitate the creation of the CJRS, to review the legislation and to manage the claiming portal and communications, amongst other things. From the date of the first meeting of the CJRS forum in May 2021, there have been discussions centred on what would happen at the end of the scheme, i.e., would the JSS and the JRB be resurrected, or would they be scrapped? JSS and JRB scrapped The extension of the CJRS to the end of September 2021 effectively sounded the death knell for both the JSS and JRB, because the government considered that the extension to the CJRS was generous enough and did not warrant further assistance, especially now that the vaccination programme is almost complete. Confusion has been noticeable amongst ● The CJRS came to an end on 30 September 2021 ● The job support scheme (JSS) and job retention bonus (JRB) have been scrapped ● HMRC has now published clear guidance on claims and offsetting underpayments and overpayments.
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| Professional in Payroll, Pensions and Reward |
Issue 76 | December 2021 – January 2022
COMPLIANCE
Payroll processing in a bureau environment
Sarah CraceMCIPPdip, payroll manager at LBGroup, shares her experience of working in a payroll bureau, and the challenges faced over the last eighteenmonths
W orking in a bureau setting has changed dramatically over the past five to ten years, with the introduction of legislative changes from real time information, automatic enrolment, general data protection regulation (GDPR) and the more recent changes that have impacted us, in terms of the coronavirus job retention scheme (CJRS). The primary purpose of payroll – to pay employees – has largely become unchanged throughout the duration of the recent pandemic, however, there have been numerous changes that have impacted the payroll world, making the provision of the payroll service much more complex. The introduction of the CJRS was the first of the major impacts to the payroll provision following the Covid-19 pandemic. The impact on a bureau setting, not only in respect of CJRS implementation, but with many of the changes that were introduced, was that we had the task of managing the changes for multiple clients with different expectations, whilst building our knowledge on new subjects. The pace at which we must manage and learn is extremely fast, and the volume we must manage is substantial. The key to ensuring we successfully manage such changes is organisation and effective management, and ensuring we have robust systems in place to provide our clients with an efficient service. Changes to statutory sick pay for Covid- 19-related illnesses were also introduced because of the pandemic, which prompted the requirement to request further information from clients when managing sickness records, to ensure accuracy of payments. The uncertainty for many businesses, particularly smaller businesses during the pandemic, has also resulted in an increase in queries relating to redundancy payments, reduced working hours and flexible working. Whilst bureau team members are not experts in the human resource (HR) and employment law fields, we have had to develop our understanding and training requirements in these areas,
to provide our clients with guidance and support as an intermediary to our chosen HR and employment law specialists. Processing payroll, particularly for multiple clients, is not just about processing payments and submitting the details to Her Majesty’s Revenue and Customs (HMRC) – there is an intrinsic link with other departments and areas of the business, such as HR and employment law, the tax department and the accounts and audit teams, where we manage all services for clients. There have been numerous changes that have impacted the payroll world, making the provision of the payroll service much more complex Data and analytics is one of the most visible market trends behind the complexities of payroll, as payroll is an important data repository for personnel information, and therefore it is essential we are conforming to GDPR compliance, to protect this personally identifiable data. We have to ensure all of our data is stored per guidelines, for each client, and to enable compliance, our reports are encrypted and sent to clients, to ensure we limit the risk of data breaches. All the changes introduced over the past few years have had a significant impact on any payroll provider, but have been particularly challenging for bureaus, who must cater to a number of different client and business requirements, ensuring consistency with our service levels, whilst
managing these transitions. We have to ensure we adhere to legislation and operate all processes on each payroll we manage, whilst doing so in a high-intensity and fast- paced environment. Communicating changes to clients and managing the process with them throughout is key to a successful client relationship and ensuring each client payroll is processed effectively. As agents for multiple clients, we do face numerous hurdles, particularly with HMRC. As we only have limited access rights to clients’ pay as you earn accounts, it can make liaising with HMRC and trying to ascertain pay queries a very difficult task. Recently, HMRC has updated agent accounts so we can view payments made by clients, which has gone some way towards simplifying this process. Where we do not manage certain processes for clients, such as processing payments to HMRC, it can make it more difficult for us when we are required to review accounts or investigate underpayment queries. We have the additional work of collating payment information and reconciling with our systems before raising a query with HMRC. Payroll hasn’t always been recognised as an industry in its own right, however, in recent years there has been more of a push for payroll to be recognised as such. Due to the importance of payroll, and it being at the forefront during the Covid-19 pandemic, LinkedIn has recently recognised payroll as an industry, which is a great step for payroll professionals. With this support, and continuing awareness being raised by the CIPP (including National Payroll Week), we hope this brings us some way towards other departments, sectors and businesses having a better understanding of payroll, particularly the impact of legislative changes for payroll bureaus. Although life as a payroll bureau worker can be particularly challenging, especially in times of significant external change, it is a very rewarding role. n
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 14
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