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Dear All
Many thanks for the RTI meeting held on the 28th March 2013. Shame that went so quickly and there was no time to ask more questions.
I was hoping that by the end of the meeting I would be completely confused free with this RTI, but unfortunately, the more I became aware of the different things, the more confused I got.
I will try to separate my questions so hopefully someone will be able to provide me some guidance.
FPS
My first comment is about FPS. When we are talking about the FPS are we actually talking about individual FPS or group FPS? With this I mean, and putting in the same line of scenario I described in the meeting. I run both a weekly and monthly payroll. The First FPS would be before I process the 1st payroll. Does this mean that I need to send 2 first FPS, as I run both weekly and monthly payroll? Or does this mean that I will be sending First FPS for every staff I will be processing payroll, 20 First FPS as I have got 12 Monthly Paid staff and 8 Weekly Paid staff?
When I have a new joiner in the middle of the year then I need to send another first FPS, isn't it? And the same applies with leavers, that I send the Final FPS?
If the above is correct then I believe I understand what these terminologies actually mean.
FPS and pay dates
An intensive discussion was carried out about Pay Dates and Submission dates and the more I think about what is required, the more confused I get.
As explained I run the software Moneysoft to process the payroll. This is a RTI Ready Software recommended by HMRC, so I assume that all the information HMRC requires is handled by Moneysoft. Unfortunately I was not able to speak to Moneysoft customer service about the different things that were mentioned in the meeting such as ticking the Irregular payments box, as the software does not seem to have this. Furthermore I seem to recall that I read that in order for HMRC to know about this Irregular payments, then I would need to select “Other” in the working hours range, but I was told in the meeting that the working hours “Other” and Irregular payments are two complete distinct things.
I also recall that for the directors we could choose annually paid, but again I cannot see anything on the software that allows this. The options I have got are Weekly paid, Fortnightly, 4-Weekly and Monthly.
Finally in regards to this and the cash advances I am slightly confused about the reporting to HMRC.
In the bar scenario I gave currently my client pays bar staff some cash advances before the end of the month, when payroll is processed. Staff gets paid cash upon request and this could vary between £0 to £1000.00 or more. These cash advances do not correlate to the hours worked and all of the cash advances they get are then deducted as subs to the net pay. The gross pay is calculated based on the hours worked for that month, and then the income tax and NIC are calculated on a monthly basis and then deducted with constitutes their net pay. After that the cash advances are deducted to the net pay, so they are paid only the difference.
I was told that every cash advance needs to be submitted to HMRC via the FPS. My question now relates to how can the person dealing with the payroll submit the information to HMRC? So if the person gets 25 cash advances in a month, then 25 FPS need to be sent to HMRC? I mean how can this be possible? I was told that I can process the payroll on a daily basis. I have never seen a payroll practice processing daily payroll and I have done a payroll course and I have never heard of such a thing. Even the HMRC manual payroll tables are weekly and monthly, not daily…, so I am not sure how can this be possible.
Furthermore how can this information can be sent to HMRC via FPS? On my payroll package and described above I have Weekly paid, Fortnightly, 4-Weekly and Monthly payroll, so how can I report to HMRC that I have paid £20 to Mr A today (net), £50 tomorrow, £5 on the next day? I have clicked on my payroll package to do a test on the FPS and the information that is sent is the Weekly payroll information, so where can I put the £20 above???
I do not want to be a pain. I think it was just time to implement RTI, so the HMRC records are more up-to-date and people’s earnings are assessed more promptly but if the above is a must, then this is just a “joke” in my opinion.
This means that in this occasion the payroller has 7 days to report the PAYE information, meaning that in this scenario monthly payroll needs to be processed weekly instead. This will cause a massive burden (admin and financial) to SME and companies that provide cash advances, as instead of processing a monthly payroll they will need to process a weekly payroll., so their payroll costs will increase by almost 4 times!
Directors Pay
Finally I have got a question in regards to the directors and NIC threshold.
Some Accountants put the Directors salaries up to the Personal Allowance Threshold, so they do not pay any tax, but if the code is 944L, then the Directors and employer will end up paying NIC. What is more tax efficient way:
- pay up to the Personal Allowance Threshold (no payment of Income Tax)
- pay up to the NIC Threshold (no payment of Er and EE NIC)
when the director is also paid dividends?
PS1 : I would welcome those that attended the RTI with the software companies to comment on the above (whether Sage, Quickbooks can handle Daily, Annual, etc payroll).
PS2: Can someone talk about TOMS on the next meeting and or Gifts to staff and clients?
Many thanks
Carla
Edited at 31 Mar 2013 01:44 AM GMT
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