PAYE PoolingSaturday, October 29th, 2011
Last week, HMRC published the above discussion document as part of Government’s commitment to improving and simplifying the PAYE system and the associated burdens for employers.
At present, most employers will have a single PAYE reference, though an employer can elect to have more than one. For example, a large employer may be the overall employer; however, have several legal entities within it, each requiring its own tax reference – Head Office, staff, International staff, Mobile staff etc. As a result, some of the payroll operations are then duplicated, for example, separate monthly payments, separate P14 / P35 submissions etc. HMRC recognises that this is an ‘unwelcome’ administration burden on employers.
The latest proposal will allow an organisation with such a set-up to ‘pool’ its functions for PAYE purposes. Therefore, the Head Office, International and Mobile staff would retain their own legal entities and, probably, individual payrolls, but have ONE tax reference
and only ONE PAYE function for:
- Monthly remittance to HMRC
- Exchange of new starter / leaver forms P45 and P46
- P14 / P35 Return
- P9D / P11D Return etc
On the surface, this does seem like a good concept – retain the legal entities and individuality of separate groups within one organisation, however, treat them all as one for PAYE purposes, if approved by HMRC. However, we should give this serious thought rather than just looking at the possible benefits of reduced administration from a PAYE perspective. Using the above example of one company with separate Head Office, International and Mobile staff payrolls, here are just a few considerations that come to mind:
- What about the flow of tax codes and Student Loan information?
- Can the payroll software / payroll provider cope with such a pool of PAYE functions, and at what cost to the employer?
- What about a dispensation or PSA that applies for Head Office staff but not International or Mobile staff?
- If the International and Mobile payrolls are wholly processed in Jersey, for example, is it more of an administration burden to amalgamate the PAYE functions with the Head Office one that might be based in London on a totally different piece of payroll software?
HMRC appear very receptive to comments and suggestions in this discussion document, therefore, it is in the profession’s interests to read and make comments, where appropriate. The deadline for responses is 15 December 2011.