Employer Bulletin: August 2022

HMRC have published their Employer Bulletin for August 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered. 

 PAYE Settlement Agreements: a new digital version of the PSA1 form

• HMRC have redesigned the PSA1 form following feedback from employers. 
• A digital submission route has also been introduced. 
• If using the paper PSA1, employers may have to complete more than one form depending on where employees live.
• The digital PSA1 will allow employers to submit one form for all employees regardless of their location.
• The new form is available here: PAYE Settlement Agreement (PSA1).

See PAYE Settlement Agreements

Payment deadline and calculation reminder

• Tax and National Insurance owed under a PAYE Settlement Agreement must be paid by 22 October after the tax year to which the PAYE Settlement Agreement applies (19 October if you pay by post). 
  • Late payments may result in penalties and/or interest being charged. 
• Employers must also send their calculations to HMRC.
  • The PAYE Settlement Agreement PSA1 calculation form is available.
  • A calculation must be submitted even if there is no amount due to pay.
• If HMRC approves a PAYE Settlement Agreement before the start of a tax year, employers can include any expenses and benefits contained in the agreement.
  • If the agreement is approved after the start of the tax year, employers might need to report some items separately.

See PAYE Settlement Agreements and PAYE: Paying HMRC

Employers PAYE: introduction of variable payment plan

• From 3 October 2022 (previously 19 September 2022) employers will be able to take advantage of a new variable Direct Debit payment plan.
• The service can be accessed through Pay employers’ PAYE or directly through the business tax account and the employers PAYE service.
• There will be changes to the business tax account and the employers’ liabilities and payments screens on the employers' PAYE service.
• A new link ‘Set up a Direct Debit’ will be introduced and this will allow employers to set up a Direct Debit instruction, authorising HMRC to collect directly from their bank account based on their return submissions.
• Following set up, the link will change to ‘Manage your Direct Debit’ and an employer will be able to view, change or cancel the Direct Debit online.
• The facility to create, view, amend and cancel a Direct Debit is restricted to employers only, there is no scope for agents to do this.
• If signed up to a variable payment plan, the following charges will be collected on receipt of the returns to HMRC:
• • Full Payment Submission.
  • Employer Payment Summary.
  • Construction Industry Scheme.
  • Apprenticeship Levy.
  • Class 1A National Insurance.
  • Earlier Year Update.

See PAYE: Paying HMRC

First Full Payment Submission for new starters: the importance of using the correct employee addresses, correction

This article was originally published in the June 2022 Employer Bulletin with incorrect guidance around what to do when receiving a late P45.

When completing the first Full Payment Submission for new starters:

• Obtain and enter your employee’s correct address and postcode and use the employee’s P45 information to record their previous pay, tax and student loan (if applicable).
  • If the employee does not have a P45 you can use the starter checklist for PAYE.
• If you use the starter checklist to add the employee onto your payroll records and you receive the P45 after you have received a tax code from HMRC, you do not need to update the previous pay, tax, or tax code on your payroll software, only update student loan details (if applicable).

See PAYE: Starter checklist new employee 2022-23

Other updates which might be relevant to employers

VAT deferred due to COVID-19: act now to avoid a penalty

• Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 should act now if they have deferred VAT outstanding as a 5% penalty or interest may be charged.

See COVID-19: VAT deferred payments

Tax avoidance: don’t get caught out

• HMRC’s ‘Tax avoidance — don’t get caught out’ campaign helps contractors to spot the signs of tax avoidance, understand the financial risks and check their pay arrangements to prevent an unexpected tax bill.

You must sign up now for Making Tax Digital for VAT

• Most VAT-registered businesses must now report under Making Tax Digital for VAT (MVD). 
• Businesses that are not exempt and haven't yet signed up to MTDfV need to do so before filing their next VAT return, otherwise, they could receive a penalty. 

See Making Tax Digital: VAT (subscriber guide)

Employees applying for a certificate of liability to pay Social Security contributions only in the UK: new attachment facility

• HMRC have extended the attachment facility to all five forms for employees applying online for a certificate of liability to pay Social Security contributions only in the UK while working abroad. 
• This means that 64-8s and any supporting information may now be attached at the time when any of these forms are submitted online. 

Bringing commercial goods into Great Britain in baggage: moving to the Customs Declaration Service to submit declarations

• After 30 September 2022, the Customs Handling of Import and Export Freight (CHIEF) system will close for import declarations.
• Business travellers bringing commercial goods into Great Britain in baggage after 30 September 2022 will need to submit their declarations through the Customs Declaration Service, either individually or through a customs agent.

New Tax Residence Indicator tool

• HMRC has launched a new tool to help customers to determine their tax residence status by applying the rules as set out in the Statutory Residence Test (SRT). 

See Tax Residence Indicator and SRT: Statutory Residence Test

New professions able to issue fit notes

• New legislation to allow a wider range of healthcare professionals to certify fit notes has been introduced by the UK government.
• From 1 July, nurses, occupational therapists, pharmacists and physiotherapists are all able to legally certify fit notes in addition to doctors.
• This change does not otherwise alter the purpose and function of the fit note. 
• These professionals should be working within general practice or delivering NHS services as access to the new version of the fit note is limited to these settings.
• Updated guidance and training for the healthcare professionals in scope has been delivered and updated guidance for employers and patients is available here.

Organised labour fraud

• Organised labour fraud is the collective name HMRC gives to three main frauds:
  • Labour fraud in construction.
  • Mini-umbrella company fraud.
  • Payroll company fraud.
•  All three frauds share some common traits. Examples include: 
• • Fraudulent businesses in the labour supply chain have a short life span, sometimes as little as 12 months. They will then be abandoned or become insolvent; another entity will then take their place.
  • Hijacked VAT registration, Construction Industry Scheme registration and/or PAYE scheme numbers.
  • Unusually long supply chains which often make no commercial sense.
  • Turnover in fraudulent businesses rises at an exponential rate and debt accrues quickly.
  • The director’s business history suggests they lack the experience to run a company of that type and size.
  • Directors may have a history of ‘phoenixing’ companies.
• HMRC recommends that businesses apply the due diligence principles when they receive a supply of labour. This can be broken down into ‘Check, Act and Review’:
  • Check: know the risks: legal, financial, tax and the social obligations of suppliers.
  • Act: conduct robust due diligence on suppliers and act to mitigate or remove risks.
  • Review: effective due diligence requires continuous monitoring and review.

External link

Employer Bulletin: August 2022