RTI – U-Turn re The Leavers’ StatementFriday, February 17th, 2012
In January of this year, we discussed the issue of HMRC’s Starters and Leavers Scenarios document which proposed the abolition of both the P45 and the P46. The P45 was to be replaced with an undefined format Leaver Statement, issued to leavers from an RTI employer – i.e. an employer who was live on RTI. We explained that the Leaver Statement would gradually become the replacement for the P45 as more and more employers became RTI employers. However, in the meantime, there would be the transition period during which time some employers would be issuing the undefined formatted Leaver Statement whilst non-RTI employers would continue to issue the formatted P45.
Around the same time, draft RTI Regulations were put out for consultation which contained the planned insertion of Regulation 36ZA into the Income Taxes (PAYE As You Earn) Regulations 2003. Simply, this Regulation gave the legislative green light for the above Leaver Statement and P45 scenario.
Unsurprisingly and justifiably, there was much alarm in the payroll industry about the new Leaver Statement. The Statement had the potential of varying between one payroll provider and the next due to the free format nature that was being allowed. As well as the potential for a ‘user-defined’ form, there was the inevitable confusion surrounding the change and the transition period during which both the P45 and the Leaver Statement existed. HMRC acknowledged this and issued a Technical Note dated 14 November 2011 saying that they were working with ‘interested parties’.
The draft Regulations closed for consultation on 09 January 2012, around which time HMRC met with these parties. Both the consultation responses and this meeting led to the announcement on 06 February that the P45 will remain and that plans to introduce the Leaver Statement have been withdrawn.
Therefore, under RTI, issuing the P45 will still remain an employer obligation. The employee will take this to his or her next employment, however, recording and reporting will all be done via the RTI submissions that the employer will be required to make. The P45 should not be sent to HMRC by either the employer or the employee for fear of penalties for non-compliance of online filing obligations.
The Learn Centre expressed concern and objected to the introduction of the Leaver Statement. At a time of massive change in the profession, this was one change too many, too soon. We, therefore, welcome the withdrawal of this unformatted document and await revised Regulations.
Once all employers are live RTI Employers, it would seem to make sense to revisit the issue at that time. After all, if data is exchanged in real time, the new employer will be advised of the pay and tax for the starting employee by HMRC, so Parts 2 and 3 could become redundant at least. However, I reiterate – let’s wait until we are all up and running before we look at change again!
- Payroll Help 06 January 2011 – RTI – The P45 and the P46
- HMRC – Starters and Leavers Scenarios December 2011 (removed by HMRC 2012)
- HMRC - Technical Note ‘Proposal to Abolish the P45/P46 Forms’
- NDS – ‘P45 Set to Continue’