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hellobrightpayuk@brightsg.com 0345 9390019Jun 2016
17
Every quarter UK Visas and Immigration and Immigration Enforcement publish a report showing the number of fines issued to employers in each region of the UK for employing illegal employees. Over £21 million fines were issued in the second half of 2015. The total amount of illegal employees in that same period was 1,820, the area with the most illegal employees was in the London and South East region.
Employers can face fines and criminal prosecution for hiring illegal employees, the maximum fine having increased from £10,000 to £20,000 in May 2014 for illegally hiring an immigrant. Employers are advised to ensure they know what the correct work checks are and ensure these checks are being made.
On GOV.UK the UK Visas and Immigration and Immigration Enforcement have An employer’s guide to right to work checks which details:
• what a right to work check is
• why you need to do right to work checks
• whose documents you should check
• how to carry out checks
• when to carry out initial checks, follow-up checks and what happens under TUPE what documents are acceptable.
Jun 2016
13
Employers MUST enrol all eligible jobholders into a qualifying AE pension scheme, even if they know or think that all employees are going to choose to opt out. Employees need to have the ability to exercise their right to opt out. Employers must also arrange active membership for non-eligible jobholders and entitled workers if they exercise their right to opt in or join the pension scheme.
Opting-out is when a jobholder decides to leave the pension scheme that has been set up by the employer within a set opt-out period. The employee needs to decide within a month of becoming an active member of the pension scheme if they want to opt out. Employers must not try to persuade or encourage their employees to leave or opt out of the pension scheme. This is considered to be an inducement.
Opting out for the employee:
Jobholders can only opt out of a scheme once they have become an active member and have been given the required auto enrolment communications by their employer. Opting-out can only happen within a specific time period, known as the ‘opt-out period’. If a jobholder decides they wish to opt out, their employer must receive an ‘opt-out notice’ for the employee, which is normally provided by the pension scheme. Entitled workers who decided to exercise their right to join the pension scheme are not entitled to opt out but they do have the right to cease active membership.
There is a fear that some employees may feel pressurised into opting out of the scheme.The decision to opt out must be taken freely and without any persuasion from the employer. An opt-out notice must not be submitted until the jobholder has become an active member of a scheme. If the employee subsequently changes their mind and wishes to opt back into a scheme, they need to write to their employer informing them of this decision. If the employee decides to remain out of the scheme, the employer will automatically re-enrol them back into the pension scheme in three years time should they meet the necessary criteria. The employer must also keep records of any employee opt-outs to assist with this.
Opting out for the employer:
The employer must take action once they receive an opt-out notice for a jobholder. Employers need to check that they receive a valid opt-out notice and that it is within the relevant ‘opt-out period’. Once the employer has received a valid opt-out notice, they must stop deducting contributions immediately. The jobholder needs to be treated as if they have never been a member of the pension scheme and should be refunded any contributions that have already been deducted to date.
Employers must not accept an invalid opt-out notice, for example if the jobholder is outside of the opt-out notice period. If the employer receives an opt-out notice after the opt-out period, they must instead cease active membership for that jobholder. Jobholders who leave an occupational pension scheme after the opt-out period has ended, may also be entitled to a refund of contributions. This will depend on when their pensionable service started and the pension scheme’s own rules. The employer must also communicate and explain to the employee why it is invalid.
Employees who are pressurised into opting out are asked to inform The Pensions Regulator.
Remember all employers need to complete a Declaration of Compliance which will inform The Pensions Regulator how they have complied with their automatic enrolment duties.
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Jun 2016
2
For the new tax year 2016-17 HMRC have introduced a new exemption that removes the liability of income tax for certain low valued Benefits in Kind ('Trivial BiKs')
Currently this is subject to Parliamentary approval and will be part of the new legislation Finance Bill 2016. Draft guidance on the new exemption has been published on GOV.UK and will be included in HMRC's Employment Income Manual later in the tax year. Previous treatment of Trivial BiKs was that employers could agree with HMRC that particular BiKs could be treated as trivial and did not need to be returned to HMRC at the end of the tax year and this no longer applies.
General conditions that a 'trivial BiK' must meet in order to qualify are:
• A. the BiK must not be cash or a cash-voucher
• B. the BiK must cost £50 or less
• C. the BiK must not be provided as part of a salary sacrifice or other contractual agreement
• D. the BiK must not be provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services
In a tax year for an employee there is no limit on the amount of BiKs that can be provided where all the conditions are met, unless Condition E applies (see below)
Close Companies
Condition E applies an annual £300 cap where a trivial BiK (that meets conditions A to D) is provided by an employer that is a close company to an employee that is:
• a director or other office-holder in the company member of the family or household of a director or office-holder of the close company
Jun 2016
2
HMRC has provided a soft landing for late filing penalties for full payment submissions (FPS) under RTI since 2014/15, but that was due to end on 5 April 2016. Now, seven weeks into the 2016/17 tax year, HMRC has announced that the late filing penalty soft landing will be extended to April 2017. The fully automatic late filing penalty regime for RTI was supposed to come into force from 6th October 2014 for employers with 50 or more employees, and from 6th March 2015 for all other employers. In fact, the automatic function was disconnected, and HMRC decided to risk assess the issue of all RTI late filing penalties.
HMRC will continue with this risk-based approach until at least 5th April 2017. This means that only employers who have persistently filed their FPS late for several months will be issued with a penalty – which can be appealed.
Jun 2016
2
For company cars HMRC has issued details regarding the latest Advisory Fuel Rates. From the date of change employers may use the old rates or new rates for one month. Employers are under no obligation to make supplementary payments to reflect the new rates but can do so if they wish. Hybrid cars are treated as either petrol or diesel cars for this purpose for the fuel rates.
Details can be seen at https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016
Jun 2016
2
During the 2016-17 tax year, HMRC has decided to continue their approach of the 3 day easement and the risk-based approach to charging penalties. Employers will not incur penalties for delays up to three days in filing PAYE information to HMRC. This is due to a review of this approach that was implemented in the 2015-16 tax year which showed a large reduction in returns being filed late.
Employers are required to file their PAYE information to HMRC on or before each payment date, which is the statutory filing date, unless the circumstances set out in the 'sending an FPS after payday guidance' are met. The three day easement is not an extension to the statutory filing date. No late filing penalties will be charged for late filing up to three days after the statutory filing date. However, employers who consistently are filing their returns for up to the three days after the statutory filing date will be monitored by HMRC and may be issued with a penalty.
HMRC will continue to monitor the situation and will review their approach if necessary for the tax year 2017-18, focusing on employers who are constantly filing late and failing to meet the statutory deadlines.
May 2016
16
The deadline for renewing tax credits is the 31st July and for the periods of June and July the tax credits helplines are very busy. Payments will be stopped if tax credits are not renewed by the deadline of 31st July. HMRC are asking employers to encourage their employees to renew their claim for tax credits as soon as possible and using the online method.
Renewing online is easy and is less time consuming, any employee can do this once they have received their renewal pack. The renewal packs are being sent out by HMRC from April to June. It only takes on average 6 minutes to renew using the online method. In 2015 around 750,000 renewed their tax credits using the online service. Employees need to report any changes in their circumstances, example, changes to working hours, income etc. Anyone that cannot renew online can seek support through the tax credits helpline.
Employers can help encourage their employees to renew their tax credits by a number of methods:
• Asking their employees to check their renewal packs and to ensure all data is correct and up to date and renewing online
• By ensuring all the employees payment details and personal details through payroll have been reported to HMRC by Real Time Information
• Employers could include a note on the employees' payslips from April to July mentioning renewing tax credits and the deadline date
• If there is a business/company newsletter that it can be mentioned regarding renewing tax credits and the deadline date
May 2016
16
The Pension Tracing Service have launched a new DWP website to help people find their lost pension saving. Currently there is an estimated £400 million in unclaimed pension savings. The new website has been designed to help people locate their hard earned savings for their retirement fund.
The wider pension reforms are creating a dynamic market where people have greater freedom and flexibility over their savings. The DWP expect the reforms will increase demand for the Pension Tracing Service. The free online service is simple to use and provides trace results immediately. Individuals enter their former employers’ details into the online database and are provided with contact details for pension schemes they may have paid into.
The new DWP website enables people to search a database of more than 320,000 pension scheme administrators. https://www.gov.uk/find-pension-contact-details
May 2016
10
Auto-enrolment brings both new challenges and new opportunities.
When I talk to smaller practitioners I am no longer surprised when they tell me that they struggle to attract their ideal clients. They may have a steady flow of new clients through their website, referrals or networking. But all too often these new clients aren't willing to pay the fees accountants want to charge. And these new clients aren't often likely to want more than the bare basics of the service available.
Is this ringing any bells?
The first thing to stress is that if you want things to be different it is you who will have to do something different first. If you carry on doing what you have always done, you should expect nothing better than you've always got.
Perhaps you have decided on your preferred solution as regards auto-enrolment. If you are able to discuss and explain the options with employers you may find that you are one step ahead of the competition. Would you rather be taking on new clients who have already decided how to address their auto-enrolment obligations or those who need your help in making the crucial decisions?
Here are five simple steps you need to take if you want to attract your ideal clients:
On 17th May you can learn more about this and how to stand out from your rivals to attract clients who are happy to pay you a premium for that special something only you can deliver. That's just one of the topics I will be addressing during the accountants' breakthrough webinar.
You will hear from myself and Patrick McLoughlin of Accounting for Growth, the practice growth specialists. Patrick will explain the 4 core competencies you must master to attract a consistent flow of ideal clients.
We are collaborating on this new project which starts with this 60 minute Free Webinar, from 11am, May 17th. It's the first of a series that will form the Accountants' Breakthrough Programme.
Register now by clicking on this link to ensure that you qualify for founder member status and special privileges even if you cannot make the launch webinar on 17 May.
Mark Lee FCA can be reached through his website: www.bookmarklee.co.uk.
May 2016
4
As automatic enrolment is a requirement that all employers must comply with and with compliance rates of all sizes of employers remaining high (in the high nineties) there are a number of employers that are not complying. According to The Pensions Regulator's (TPR) latest quarterly compliance and enforcement bulletin the amount of Escalating Penalty Notices that are issued is rising.
An Escalating Penalty Notice (EPN) can be issued by The Pensions Regulator to help employer compliance with their automatic enrolment duties and is one of the statutory powers of the TPR. Employers risk a fine that increases daily if they do not regard a 28 day warning notice. On an EPN the date is specified that the employer must comply with certain duties or can be penalised with a fine that increases daily. For employers with 1 to 4 employees the fine is £50 per day and for employers with 5 to 49 employees the fine is £500 per day. If an employer ignores the EPN it may lead to additional costs that could have been avoided.
The Pensions Regulator's Press Release for the First Quarter of 2016 shows the headline figures below and can be found at http://www.thepensionsregulator.gov.uk/doc-library/research-analysis.aspx#s16191
• 3,057 Compliance Notices issued - totalling 7,834 to date
• 806 Fixed Penalty Notices issued - totalling 2,234 from 2012 to date
• 96 Escalating Penalty Notices issued this quarter - totalling 127 to date
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