Supporting Older People Conference

Transcription

1 Supporting Older People Conference OS5: Lets talk about TAX Speaker: Chair: Caroline Laffey Senior Manager, Employment Tax and People Services KPMG Simon Charlick Director of Operations National Housing Federation

2 OS5 Lets talk about TAX Caroline Laffey Director, KPMG

3 Agenda Employment Tax Update Real Time Information (RTI) Expenses Reporting PAYE Settlement Agreements Travel & Subsistence Payments to Office Holders Employment Status Termination Payments Employer Provided Accommodation Construction Industry Scheme (CIS) The Reward Journey 3

4 Real Time Information What is RTI? RTI is a fundamental change to PAYE Being brought in from April 2013 to support benefit changes Currently all reporting is of historic data, new system will provide data on a real time basis Under RTI employers will provide all payroll information to HMRC every time employees are paid Under RTI employers will report every element of an employees earnings and the tax and NIC treatment applied each time a payment is made More information + more detail + more frequent = more risk 4

5 Real Time Information What will be reported? 5

6 Real Time Information When will RTI be implemented? Pilot from April 2012 (300 employers) July & November 2012 Expand the pilot to include a further 250,000 employers Compulsory implementation for all employers between April and October 2013 Fully operational by April 2014 to provide DWP with the information required for the Universal Credit. 6

7 Real Time Information Current vs New reporting requirements Current RTI Information sent to HMRC Annual Monthly / Weekly Format of submission Employer year-end reporting to HMRC Employer year-end reporting to employees Electronic returns to HMRC P35 & P14 s P60 Initially via the government gateway Ultimately alongside payments to employees via BACS None P60 Joiners & Leavers P45/46 P45/46 Year-end expense and benefit reporting P11D & P11D(b) P11D & P11D(b) Reporting in-year corrections to HMRC None Part of RTI submission 7

8 Real Time Information Getting ready for RTI Software issues Review payroll processes and policies to ensure the correct information is submitted to HMRC on time Undertake data cleanse to ensure accurate reporting of personal details, pay elements etc Update P11D reporting dispensation to reduce payroll reporting Update PAYE Settlement Agreements - vouchers Undertake PAYE review and consider tax and NIC treatment of contentious payments e.g. termination payments, mileage payments HMRC will have unprecedented access to data when assessing PAYE and NIC compliance Targeted reviews will lead to prompted disclosures and higher penalties 8

9 Real Time Information Expenses tax and NIC reporting How should the expenses be reported? Expense Business Non-business Covered by dispensation Not covered by dispensation Cash/credit card/pecuniary liability Employer meets expense No reporting P11D PAYE/P11D Class 1 NIC P11D Class 1A No Class 1A Tax relief via self assessment PSA 9

10 PAYE Settlement Agreement Agreement set up before benefit provided Calculations to HMRC July 2012 Payment date 19 October 2012 For example vouchers, board members travel, broadband Staff entertaining What constitutes staff entertaining? Annual function exemption Training exemption Subsistence Business entertaining Working lunches (?) Away days (?) Conferences (?) 10

11 Travel and subsistence Mileage AMAP vs. NJC rates Essential Car User Allowance or Car Allowance? Mileage company car (authorised mileage rates) Documenting travel policy defining business journey Working from home objective requirement substantive duties Board Member travel claims Journeys that begin/end at home 11

12 Travel what is ordinary commuting? Home/non-workplace to permanent workplace Cannot convert ordinary commuting into business travel Permanent workplace regular attendance i.e. frequency, pattern Temporary workplace Limited duration continuous period of work lasting less than 24 months Temporary purpose self contained visits Time spent 40% of working time General rules Spend more than 40% of time for more than 24 months PWP Spend more/less than 40% of time for less than 24 months TWP Spend less than 40% of time for more than 24 months TWP unless regular attendance 12

13 Payments to Office Holders Office holders subject to PAYE and NIC Limited company/partnership or individual Intermediary IR35, S48 ITEPA 2003 (does not apply to office holders) Agency Worker Regulations ESC A37 (directors) - Intermediary has a right to appoint ESC A37 (directors) - Intermediary not controlled by individual HM treasury review of office holders Invoicing separate consultancy Tenant Board Members impact on state benefits Expenses Reasonable for unpaid board members Normal travel rules paid board members 13

14 Employment Status Consultants, subcontractors, office holders Review contractual and payments arrangements Over a number of years the courts have highlighted a number of factors which they take into consideration when determining employment status Right to Control When, Where, How, What Financial risk operating a business Payment terms e.g. fixed price Right of substitution unqualified Part and parcel of the organisation Other clients HMRC review the process in place for establishing worker s employment status 14

15 Termination Payments HMRC aspect reviews Compromise Agreements & supporting documentation How has the amount being paid been arrived at? Why is the amount being paid Compensation for loss of office S401 ITEPA 2003 Redundancy do the facts support redundancy Retirement Restrictive Covenant Contractual payments Payments In Lieu of Notice Has notice been dealt with? Is PILON contractual 15

16 Employer Provided Accommodation Accommodation provided for proper performance of duties Accommodation provided for better performance of duties and customary Does the exemption apply? On call outside of normal working hours PAYE/NIC liabilities from 6 April 2006 onwards for scheme wardens PAYE/NIC liabilities from 6 April 2010 onwards for caretakers Value of the benefit Ancillary benefits Payroll adjustments 16

17 Sector-specific issues Construction Industry Scheme regulations Contractors/subcontractors Charities/trading subsidiaries Defining operations to be reported? Key risk areas Materials deduction Plant hire e.g. scaffolding Employment status 17

18 Which Benefits? KPMG support Drivers The Reward Journey Reward as a strategic lever Stand alone, off the shelf, salary sacrifice Bespoke arrangements with a focus on return on investment Full online benefit choices Easy to implement arrangements such as childcare which save specific employees tax and NIC May also have a small cost reduction angle Typically HR led Focus on cost reduction with more emphasis on return on investment Looking for opportunities outside the norm requiring technical and creative input Various possible stakeholders : tax, finance, HR Employee engagement and employer of choice Harmonisation or change to T and C s Green / CSR / health & wellbeing agenda Require administration solution Typically HR lead Tax compliance HMRC approval Communication review Payroll advice Ideas and innovation Business case and feasibility study Implementation support for non standard salary sacrifice arrangements Employee communications Reward & communications strategic advice, branding & full content creation. Full project management Technology for salary sacrifice, TRS, flexible benefits, absence management and link to HR systems Childcare Vouchers Bikes Voluntary benefits e.g. gym membership, discount vouchers Green cars Where are you on the journey? Pensions Subsistence Allowances for mobile workers Professional subscriptions Mobile phones Holiday/sabbatical Anything and everything even if not taxefficient All possible salary sacrifice arrangements Communicate all benefits under one scheme in unified, consistent and compliant manner 18