Revised RTI Regulations PublishedThursday, April 5th, 2012
Back on 14 November last year, HMRC published draft Regulations relating to RTI. These outlined the employer’s obligations when they moved from being a ‘normal’ employer to an RTI-employer, i.e. one that is submitting data at or before the time the employee is paid under real time exchange. The Regulations are necessary for PAYE, NICs and CIS submissions under RTI and apply from 06 April 2012, the start of the first tax year in which RTI submissions can be made. They will increasingly apply to employers as more and more bed in to make their RTI submissions.
When the Regulations were originally published last year, the draft PAYE Regulations contained the proposal to insert another regulation 36ZA into the Income Tax (Pay As You Earn) Regulations 2003. This would abolish the P45 for ‘a Real Time Information employer’, defined as an employer who is obliged to return information via RTI submission and does not fall into one of the current exemption categorised for online filing. For these ‘RTI employers’, the requirement to produce a P45 would be replaced with the obligation to produce a similar, free-format document called the Leaver Statement.
Understandably, there was more than a little concern expressed about the 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 saying that they were working with their ‘interested parties’. On 06 February 2012, HMRC announced that the P45 would remain and plans to introduce the P45 had been abandoned.
On 15 March 2012, together with an updated Tax Information and Impact Note (TIIN), three RTI-related Statutory Instruments were laid before Parliament, effective 06 April 2012. These are referred to as:
The Income Tax (Pay As You Earn) (Amendment) Regulations 2012
These amend the Income Tax (Pay As You Earn) Regulations 2003 and the highlights of these Regulations in respect of RTI are:
- Definition of a Real Time Information Employer and / or Real Time Information Pension Payer
- Clarification of the exemptions from submitting in real time, including care and support ‘accidental employers’
- Amendments to the original 2003 Regulations accounting for the fact that Real Time Employers and Pension Payers will be reporting information differently to other non-RTI organisations
Non-RTI changes in the Amendment Regulations 2012 include:
- Empowering HMRC to impose a financial security from an employer with a history of non-payment of their PAYE liability
- Abolishing the Simplified PAYE Deduction Scheme to new employers from 06 April 2012
- Providing for code 0T on a non-cumulative basis to be used for all payments after leaving. This required the deletion of two separate parts of the 2003 Act which provided for Basic Rate to be used in the instances of payments in respect of securities-related payments
The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2012
These amend the Income Tax (Construction Industry Scheme) Regulations 2005 and, simply, require ‘a new form of return to be made by contractors who have suffered deductions under the Construction Industry Scheme if the contractor is a Real Time Information employer’. This will be done via the EPS at or before the 19th / 22nd monthly.
The Social Security (Contributions) (Amendment No 3) Regulations 2012
These Regulations amend the Social Security (Contributions) Regulations 2001 and primarily insert the necessary legislative structure in place for the reporting of Contributions and earnings that will be required for a Real Time Information Employer from 06 April 2012. This includes both the Contribution information that will be required on the FPS and the recovery information that will be declared on the EPS.
The Amendment Regulations also provide for HMRC to impose a financial security on an employer where there is a history of non-compliance regarding payment.
From 06 April 2012, we have two types of employer – an RTI Employer and a Non-RTI Employer. By 06 October 2013, all employers will fall into the first category. Long Regs for such a simple issue!
- HMRC – Tax Information and Impact Note (TIIN) covering Real Time Information: Improving the Operation of PAYE
- Legislation – The Income Tax (Pay As You Earn) (Amendment) Regulations 2012
- Legislation - The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2012
- Legislation - The Social Security (Contributions) (Amendment No 3) Regulations 2012
- Payroll Help – RTI Scheme Coverage