RTI – End of Year Processing

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One of the concepts of RTI is the regular flow of information to HMRC in the form of the submissions.  For most employers, this will be:

• The regular Full Payment Summary (FPS) at, or before, the net pay is paid to the employee, and
• The Employer Payment Summary (EPS), sent before the monthly or quarterly payment is made to HMRC

As HMRC are sent payroll information on a per-pay-period basis rather than an annual basis, the need for the P35 and P14 returns will be redundant for Real Time Information employers.  However, note that the requirement to produce the P60 for the relevant employees still remains.  In this regard, therefore, also note that RTI has not changed any of the remaining end of year deadlines:

• 31 May    – P60s to be issued to relevant employees
• 06 July     – P11D, P11D(b) and P9D deadline for both employee and HMRC
• 19 July     – Class 1A NICs due
• 22 July     – Class 1A NICs due (electronic payment)
• 19 Oct     – Class 1B NICs due
• 22 Oct     – Class 1B NICs due (electronic payment)

This article relates to the processes required under RTI at the end of the tax year PLUS, equally, it also relates to a situation where a tax reference has ceased mid-year, for example, if all employees on one tax reference are transferring to another and the original tax reference ceases to exist.

Final Submission for the Tax Year

When the final RTI submission occurs in a tax year, HMRC require notification that this is either the:

• Final submission because scheme ceased (Field No. 108), or
• Final submission for the tax year (Field No. 109)

The indicator with the above options is available for selection on both the Employer Payment Summary (EPS) and the Full Payment Summary (FPS), meaning that that the employer has the option of advising HMRC of the last submission on either file.  The indicator must be placed on the last submission file of the tax year, regardless of whether this is the FPS or the EPS.  For many employers, the EPS for Month 12/ Week 52 is most likely to be the final submission, as this is the file that advises HMRC of any adjustments to the FPS totals – statutory payment reclaims, for example.  However, in the instances when there is no EPS due, the indicator can be placed on the last FPS file of the tax year.

Once the indicator has been placed in either field 108 or 109, the following fields will also need to be completed which, essentially, replace the Declaration and Questions section on the current P35:

Field Number	Employer Declaration	Comment	Mandatory?
108	Indicator that this is the final submission because the scheme has ceased	Enter ‘Y’ if you have ceased as an employer are paying your employees for the last time.  You also need to enter the leaving date at data item 41 ‘Date employment contract ended’ for all employees.	Y
109	Indicator that this is the final submission of the tax year	Enter ‘Y’ if this is the last FPS or EPS for the tax year ended 05 April last.  This is the indicator that this is the final RTI submission (either FPS or EPS) relating to the previous tax year.	Y
110	Employer Contracted-Out Number (ECON)	If you operate an occupational Contracted-Out pension scheme, enter the ECON.	Y
NOTE Data Items 111 – 117 are required to be completed if you have indicated ‘Y’ that this is the ‘final submission because the scheme has closed’ (field 108) or ‘Y’ that this is the ‘final submission of the tax year’ (field 109)
111	Did you make any free of tax payments to an employee	Enter ‘Y’ if you make any ‘free of tax’ payments to an employee.  A ‘free of tax’ payment is a payment where the employer (rather than the employee) bears any tax due.  Otherwise, enter ‘N’	Y
112	Did anyone else pay expenses or in any way provide vouchers or benefits to any of your employees while they were employed by you during the year?	Enter ‘Y’ if someone other than you, paid expenses or provided benefits to any of your employees during the year as a result of the employee working for you.  Otherwise enter ‘N’.	Y
113	Did anyone employed by a person or company outside the UK work for you in the UK for 30 days or more in a row?	Enter ‘Y’ if anyone employed by a person or company outside the UK worked for you in the UK for 30 days or more in a row and you did not include them on a RTI submission.  Otherwise enter ‘N’.	Y
114	Have you paid any of an employee’s pay to someone other than the employee, for example to a school?	Enter ‘Y’ if you paid any of an employee’s pay to someone other than the employee, for example to a school, and you did not include this pay on a RTI submission.  Otherwise enter ‘N’.	Y
115	Completed forms P11D and P11D(b) are due?	Enter ‘Y’ if completed forms P11D and P11D(b) are due for the year. Otherwise enter ‘N’	Y
117	Are you a Service Company?	Enter ‘Y’ if you are a Service Company and have operated the Intermediaries legislation (sometimes known as IR35) or the Managed Service Companies legislation.  Otherwise enter ‘N’.	Y

Further Information

• Payroll Help’s RTI Coverage
• Improving the Operation of Pay As You Earn (PAYE) – HMRC Impact Assessment
• Universal Credit – Welfare that Works
• Improving the Operation of Pay As You Earn (PAYE) – Collecting Real Time Information
• HMRC Press Statement 04 April 2011
• HMRC Statement 13 May 2011
• Summary of Responses 30 September 2011
• HMRC – Draft RTI Regulations (PAYE)
• HMRC  – Draft RTI Regulations (NICs)
• HMRC  – Draft RTI Regulations (CIS)
• HMRC  – Draft PAYE Direction (Technical Note)
• NDS   – HMRC Press Statement 23 November 2011
• HMRC  - Employer Bulletin 39
• NDS  – HMRC Press Statement 12 December 2011
• HMRC  – Improving Your Payroll Data
• HMRC  – Starters and Leavers Scenarios December 2011 (removed by HMRC 2012)
• HMRC  – Technical Note ‘Proposal to Abolish the P45/P46 Forms’
• HMRC  – Initial Guidance on RTI Items May 2011
• HMRC  – Payroll Alignment January 2012
• HMRC – PAYE Update 10 – NINO Verification Response (NVREP)

Tags: EPS, FPS, HMRC, NICs, RTI, Tax Year

This entry was posted on Monday, March 5th, 2012 at 16:41 and is filed under RTI. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.