The Inland Revenue has published a new edition of the MP2 booklet Do it online: Online filing and electronic payment handbook. There are a number of new sections and some existing sections have been developed further. Most of the changes have already been described in earlier newsletters but, as a reminder, the principal changes are:

• The £;250 incentive for small employers for filing electronically will be credited to their 2005/06 payment record. As soon as the employer is certain that the returns for 2004/05 have been submitted successfully, the first payment for 2005/06 may be reduced by £;250.
  
  
• Test submissions can be sent from 6 April 2005 onwards. To send P14 records as a test submission, the employer must set the test "flag" that should be built into up-to-date payroll software. If the software does not have the test flag built in, test submissions cannot be sent. Employers are encouraged to have some records ready to trial immediately after the end of the tax year.
  
  
• Although PAYE records must be kept for three years in the form in which they created, the Inland Revenue has agreed that paper records may be kept electronically, as long as they are a complete and unaltered image of the original.
  
  
• If a business ceases during 2004/05, the cessation returns may be submitted on paper or, from 6 April 2005 onwards, electronically. From 2005/06 onwards, cessation returns may be filed electronically during the year. Large employers must file electronically to avoid filing penalties.
  
  
• A paper P60 must be issued to employees even if they are receiving their payslips electronically.
  
  
• If a large employer has failed to file electronically for 2004/05, a non-filing penalty will be incurred. It may be waived if the employer has "reasonable excuse" for failing to do so. The Inland Revenue's interpretation of that term is that the reason for non-filing must be something that is beyond the employer's control. Examples are: the loss of computer records due to fire or flood, a serious illness of death of a close family member, insufficient information available to complete the returns. Unacceptable excuses would be: the computer broke down, not being computer literate, pressure of work, the employer's agent failed to file online, sending paper return initially and filing online later, the payroll system does not meet the Quality Standard.
  
  
• A non-filing penalty for 2004/05 will be calculated on the count of employees made in October 2003 rather than the number of P14s that should have been sent.
  
  
• The "reasonable excuse" provision does not apply to small employers and their incentive payments. If the returns are not filed electronically for any reason, the incentive will not be paid.
  
  
• Employers are encouraged to use the Payroll Cleansing facility to bring their employees' NI numbers and other details into line with the Inland Revenue's records.
  
  
• Part returns may be submitted, and by different submission methods. Each part must bear a unique identifier to distinguish it from the other parts.
  
  
• Amendment returns may be submitted electronically from 6 April 2005 onwards. An amendment P35 must be sent with any amendments P14s, even if the P35 is a "nil" return.

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...back to 5 November 2004


Sources:
www.inlandrevenue.gov.uk/employers/doitonline.pdf