Further to our blog in March regarding the payment of owner-managers, HMRC have issued guidance on RTI and annual schemes, including clarification of the requirements and operating annual PAYE schemes in real time (www.hmrc.gov.uk/news/rti-annual-schemes.htm). Amazingly, HMRC are currently unable to process requests from employers to move to paying annually and register as an annual scheme or change their payment.
HMRC state that an annual scheme must meet all of the following requirements:
• all the employees are paid annually;
• all the employees are paid at the same time/same date; and
• the employer is only required to pay HMRC annually.
Once a business is registered as an annual scheme, an Employer Payment Summary (EPS) is not required for the 11 months of the tax year where no payments are made to the employees.
HMRC's debt management system will already have a record of the month the employer is due to pay, based on payments in previous years. This information has been transferred to a new accounting system and is recorded as the annual payment/filing month. If an existing annual employer changes the date/month of payment to employees, they should complete a Full Payment Submission (FPS) for the month that the payment is made to the employees. On receipt of the FPS HMRC's systems will change the annual payment/filing month over to that month.
If an employer pays an employee, or employees, and submits FPS for more than a single month in the year, HMRC will automatically cancel the annual payer status for that year and following years and issue a letter to that effect.
Non-annual schemes and NIL payments in a month
Schemes not registered as annual schemes should submit a 'NIL EPS/period of inactivity EPS' for each month. This will also apply to schemes where the employer/agent intends to apply for a scheme to become an annual scheme, in which case they will need to submit a 'NIL EPS/period of inactivity EPS' until the registration has been accepted as an annual scheme.
This seems another example of where HMRC have not thought through the practical effects of changes. The will be more updates to follow without doubt.