Updates from HMRC

Late filing penalties

HMRC is continuing to use a risk based approach in relation to PAYE late filing and penalties. Penalties will not be issued automatically where a Full Payment Submission (FPS) is filed within three days of the payment date then a penalty will not be automatically issued. Do note that this is not an extension of the statutory position whereby an FPS should be submitted prior to each payment date. Where businesses persistently use this window to file late FPSs they will be reviewed and penalties will be charged.

Class 1A NIC liability

From 6 April 2020 there will be a Class 1A NIC liability on non-contractual taxable termination payments over a GBP 30,000 threshold which has not already incurred a Class 1 NICs liability. This more closely aligns the income tax and NIC treatment of termination payments.

The class 1A liability will be 13.8% but will not be payable via the P11D(b) process. Instead, from April 2020 termination awards that include a cash element are still reportable via the PAYE/Real Time Information (RTI) process.

Off-payroll employees

Following the changes that were introduced into the public sector in 2017, the government will be reforming the operation of the off payroll working rules and extending these into the private sector from April 2020.

Ways you can prepare for these changes:

Identify and review current engagements with intermediaries, including personal service companies and agencies supplying labour
Review current arrangements for using contingent labour, this is most relevant within the organisations that are more likely to engage off-payroll workers
Having comprehensive processes in place when assessing roles from a procurement, HR, tax and line management perspective are key things to think about when ensuring consistent decisions about the employment status of the people engaged
Review internal systems, such as payroll software, process maps, HR and on-boarding policies in case any changes need to be made.

Andrew Bailey
andrew.bailey@bdo.co.uk