07.12.11 December 2011 activpayroll Client Update: Payroll and Tax news that you care about

“Welcome to the December 2011 activpayroll Client Update, another edition of our ongoing series of bi-monthly updates to keep you proactively informed of the rapidly evolving and ever changing world of payroll and taxation.

In this edition we discuss important news about HMRC, which will be of great interest to many readers. As we are approaching the payroll year-end for many of our clients around the world, we also take this opportunity to discuss the importance of timely compliance.

We are pleased to announce that we were awarded two awards earlier last month, at the Payroll World Awards. We were chosen by our industry peers to be the Multi-country Payroll Team of the Year. In addition, our Global Payroll Implementation Manager, Katy Christiansen, was awarded the Payroll Manager Award for outstanding performance for clients.

We welcome our new clients, who we support alongside more than 700 companies in over 70 countries around the world.

If you have any specific questions about how any of the changes outlined in this update will impact your organisation, please get in touch and we’ll be able to help you.”

Alison Sellar, Managing Director, activpayroll

December 2011 Update Contents:

1. Payroll World Awards: Double Win

2. HMRC Class 1A NIC penalty notice: Beware!

3. Modernising Personal Tax: HMRC aims to improve

4. HMRC RTI Research: Have they called you?

5. Protected Conversations: Did you hear that?

6. As another year comes to an end: time to prepare for the next payroll year

7. Company cars - advisory fuel rates from 1 December 2011

8. Autumn Statement: Pension Changes

9. Australian Tax Changes: Foreign Nationals

10. UK Autumn Statement: UK Tax & NIC Changes

To download a PDF version of this client update, please click here.

1.     Payroll World Awards: Double Win

Last week, activpayroll attended The Payroll World Awards for the Payroll, Tax and HR industry. This leading award scheme rewards industry leaders, chosen by their peers for their professionalism, pioneering efforts and commitment to improving their profession. activpayroll was short listed for four awards, more than any other company.

For demonstrating significant growth and performance improvements for clients, activpayroll won the Multi-country Payroll Team Award in recognition of significant international growth to deliver payrolls in more than 70 countries around the world. The judges were impressed with the innovative singular global model designed by activpayroll to support multi-national companies around the globe; providing a seamless payroll and expatriate taxation service.

Alison Sellar, Managing Director of activpayroll said, “We have managed to design and refine a singular global model that allows multi-nationals to deliver consistent payroll and expatriate tax processes globally. Many of the worlds largest firms have now adopted it, and it’s beginning to attract lots of attention around the globe. The Multi-country Payroll Team Award recognises how far we’ve come in developing this unique service. It’s a particular honour to have been awarded this achievement by our industry peers, and demonstrates the esteem they hold activpayroll in. We are committed to continuing to partner global organizations, and support their growth in new territories around the world”

Katy Christiansen, activpayroll’s Global Payroll Implementation Manager won the Payroll Manager Award for demonstrating outstanding performance in the industry. Katy initially joined activpayroll as a Payroll Administrator, learning the business from the grass roots upwards. She has continually worked towards professional qualifications throughout her career, and has built up a vast experience of client liaison over the years. Through hard work, Katy has been promoted several times, now holding her senior position, overseeing the implementation of our complex global payrolls.

Katy Christiansen, Global Payroll Implementation Manager said, "It’s such an honour to have won this award. I’m privileged to work with an amazing team of people everyday, in a rapidly expanding global business. The opportunities within activpayroll have allowed me to develop my professional skills, and get involved in amazing projects all over the world.”

activpayroll was also short-listed and commended by the independent judges for

• The Best Use of Technology Award: for development of our activ8 technology – a set of online SaaS HR software tools - to enhance the payroll function.

• The Innovation Award: for innovation that has provided significant benefits in payroll processing and payroll service provision, again for our in-house development of the innovative activ8 tools.

Alison Sellar, added, “It’s an honour to be recognised by our peers in the Payroll, Tax and HR industry as a leader in our field, during the year that we celebrate our 10^th year of business.

We are thrilled to have won two awards, it’s such a great achievement for my team, and shows the hard work, energy and creativity put in by them each and everyday to deliver the best service for our clients.

I’d like to thank those that have called or emailed us to congratulate us. It is much appreciated, and we have been overwhelmed with the response.

We will continue to refine and improve our services, to remain your Payroll, Expatriate Tax and online SaaS HR Software provider of choice for 2012 and beyond.”

2.     HMRC Class 1A NIC penalty notice: Beware!

 HMRC have recently started issuing penalty notices for companies not making returns of Class 1A National Insurance Contributions. These penalty demands are issued where HMRC have not received, or in some cases have not processed, P11D and P11D (b) forms that have a deadline for submission of 6th July. We have already received a number of notices for clients where the forms were submitted in good time, but even in these cases, we have to submit an appeal against the penalty in writing.

Penalties are £100 for each month (or part month) for every 50 (or up to 50) employees, so the penalties can be high. There has been quite a lot of discussion amongst agents and accountants about the delays in HMRC issuing these penalty notices, as HMRC are currently charging penalties for 4 months. HMRC have already been criticized by a First Tier tax tribunal earlier this year for delaying sending out penalty notices for late filing of end of year returns, with the tribunal stating that:
 
“.... HMRC deliberately waits until four months have gone by and does not issue the first interim notice, until, as in this case, September of the year of default”.
 
“There can be no logical reason whatsoever for HMRC to delay sending out a penalty notice for four months so that, in effect a minimum penalty of £500 will be levied unless the taxpayer unilaterally realised that it has failed to undertake the necessary filing”.
 
“In our judgement it would be a very simple matter for HMRC to set its computer settings so that a default or penalty notice was sent out immediately after the 19 May in any year, instead of some months later.”

Despite this earlier criticism, HMRC have again chosen to delay issuing these penalty notices by around 4 months. 
 
If you incorrectly receive a Class 1A NIC penalty notice, and wish to appeal against the penalty notice, you must write to the office shown on the notice within 30 days stating why you think the penalty notice is wrong. If your P11D and P11D (b) forms were prepared and submitted to HMRC by activpayroll, please contact Simon Wright, Audit & Compliance Manager.

For further information contact:

Simon Wright

Audit & Compliance Manager

E: simon.wright@activpayroll.com

T: +44 (0) 131 473 2325

3.     Modernising Personal Tax: HMRC aims to improve

The personal tax system administered by Her Majesty’s Revenue and Customs (HMRC) underpins our society by collecting around £250 billion a year in income tax and National Insurance contributions (NICs). It is essential for the funding of public services but, for many, the tax system can be something of a mystery.

The Government wants to hear views on how increased transparency and accessibility to tax information can build greater awareness and understanding of how the system works. They welcome views from individual taxpayers, their representative groups, employers and their representatives and tax agents.

David Gauke, The Exchequer Secretary believes that Public understanding of how much tax an individual pays is lower than it might be. He wants to achieve greater transparency so that individuals can see exactly how much tax they pay. The Exchequer Secretary has published a forward-looking discussion paper, to generate ideas about personal taxation reform.

A simpler and more transparent personal tax and welfare system helps work pay, supports fairness and encourages growth. The Government is already taking steps to improve the administration of the personal tax system. The computer system that holds Pay As You Earn (PAYE) records for some 39 million individual taxpayers was recently replaced, an improvement that is now delivering much better accuracy and efficiency.

Further investment is being made in PAYE Real Time Information (RTI) – meaning HMRC will receive information from employers about their employees’ earnings, tax and NICs at the point at which the employees are paid and not, as now, after the end of each year. RTI will mean that payments through the new working age benefits – Universal Credits – will be based on up to date knowledge about an individual’s income; and employers will know during the year where they stand in terms of their payments.

You can view the discussion document and how to participate by clicking here.

4.     HMRC RTI Research: Have they called you?

Between 24 November and 16 December 2011, HMRC will be undertaking research to help them understand the issues they need to consider when communicating the introduction of the Real Time Information system. It is vital they reach employers of different sizes and sectors, with differing issues and experiences.

If you receive a call from a company claiming to be undertaking research on behalf of HMRC, but you are unsure whether the call is genuine, you can call Luc Altmann on 020 7147 3638 quoting the name of the research company concerned and Luc will be able to confirm whether this is one of the companies involved.

This research is confidential and your details will not be passed on to HMRC. activpayroll encourage anyone who receives a call to take part in this research as it will help HMRC to better communicate with customers about the RTI system. 

5.     Protected Conversations: Did you hear that?

Prime Minister David Cameron has confirmed the government will be consulting on the introduction of ‘protected conversations’.

Such a conversation would mean either an employee or employer could request a ‘protected conversation’ at work, that couldn’t be used at a later date in a court or tribunal.

The Prime Minister said: “We will be consulting on the introduction of protected conversations, so a boss and an employee feel able to sit down together and have a frank conversation – at either’s request.”

The Deputy Prime Minister, Nick Clegg indicated that the ‘protected conversation’ plans would be introduced, in part, to allow firms to have “frank discussions” with underperforming staff over retirement, without fearing accusations of ageism.

The move is a continued part of the Governments strategy to reduce red tape in the work place, to help stimulate business growth.

The coalition Government has also confirmed its intention to increase the qualifying period for unfair dismissal claims from one year to two years from next April. It also plans to introduce fees for claimants bringing employment tribunal claims.

“This means anyone taking on a new employee can now be confident that they have two years to get the relationship right, rather than just one. And if things aren’t working out then they can end the relationship without being sued for unfair dismissal,” said Prime Minister, David Cameron.

6.     As another year comes to an end: time to prepare for the next payroll year

Unlike the UK, the majority of global territories operate an annual financial year in parallel to a January – December calendar year.

With the final payrolls being prepared for 2011, it’s time make sure that your annual end-of-year processes are in place.

With the fast pace of change around the world, it’s important to ensure that you have a current and up-to-date knowledge of territorial requirements.

Martyn Gallogly, Global Payroll Manager said, “We have a very strong relationship with authorities around the world in the territories and countries that we support our clients in. We invest our time, continually throughout the year, liaising with the authorities, to strengthen our working relationship and to ensure that we have current knowledge of their requirements and expectations for their end-of-year processes. This valuable relationship and knowledge base, enables us to proactively ensure your obligations are met.”

activpayroll will shortly be advising our global clients of the specific territorial documents, forms and submission deadlines that we will be completing on their behalf. This information is provided for clarity, to allow them to clearly understand the requirements that must be met, and to allow them to track our progress to see that we’ve completed their obligations thoroughly and on time.

If we require a client input or authorisation for an authority, our Global Team will contact the concerned client directly.

Martyn Gallogly, Global Payroll Manager added, “The important thing to remember is that we proactively take the responsible role of ensuring that your obligations are accurately met on time.

If we need any input from you, we will directly contact you, and specifically request what we require. We’ll also keep you informed of progress, and inform you when the process is complete. 

If you have any questions about your end-of-year process, don’t hesitate to contact us. We are here to answer your questions, please don’t hesitate to contact our team.”

For further information please contact:

Martyn Gallogly

Global Payroll Manager

E: martyn.gallogly@activpayroll.com

T: +44 (0) 1224 860800

 7.     Company cars - advisory fuel rates from 1 December 2011

HMRC have just announced the latest approved fuel rates for drivers of company cars. These rates apply to all business journeys on or after 1 December 2011 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose.

Note: Petrol hybrid cars are treated as petrol cars for this purpose.

 8.     Autumn Statement: Pension Changes

 The Chancellor, George Osborne has announced that the proposed state pension age rise to 67 between 2034 and 2036, has been brought forward to start eight years earlier in April 2026.

Despite considerable pressure from lobby groups the Government has taken this measure to attempt to address the national deficit, a symptom of the global recession.

To recap:

• Pension age rising to 65 for women by November 2018
• Pension age of 66 for men and women by October 2020
• Up to 67 for men and women by April 2028

What does it all mean for your employees?

• People born after 5 April 1960 and before 5 April 1961 - aged between 50 and 51 - will have a state pension age between 66 and 67.
• People born between 5 April 1961 and 5 April 1969 - aged 42 to 50 - will have a state pension age of 67.
• People born between 6 April 1969 and 5 April 1977 - aged 34 to 42 - already have a state pension age of 67, so these proposals will not change this.

A State Pension calculator is provided by Directgov, the public services website. It may be useful for your employees to establish their pension age themselves.

You can access the calculator here.

9. Australian Tax Changes: Foreign Nationals

On 29 November 2011, the Australian Government delivered a bombshell announcement that will affect all foreign nationals working in Australia.

The change will substantially increase the Australian tax costs for foreign nationals working in Australia. It will also increase the employment on-costs of their employer.

To date, most foreign nationals working in Australia on the common, four-year “457” work visa are eligible for tax-free rent and food. This applies for the visa holder and their accompanying family, during the four-year duration of their Australian assignment.

This is called the Living Away From Home Allowance or “LAFHA”. A cash LAFHA (or its equivalent non-cash benefit of free Australian rental accommodation and food) for a 457 worker is usually tax-free for the employee and also benefits from nil Fringe Benefits Tax (“FBT”) for the employer company. So it is entirely tax-free. It also reduces the company’s State Payroll Tax (which in Western Australia, for example, is 5.5%). All of this will change from 1 July 2012.

From 1 July 2012, a LAFHA will no longer be tax-free for foreign workers in Australia on a 457 visa. This is a clearly political decision, apparently aimed at taxing the huge number of (non-voting and hence voiceless) foreign nationals working in Australia, ostensibly to balance the Government’s budget deficit. Australian nationals will still be entitled to claim LAFHA. Foreign workers will not (with a very rare exception).

If you are an HR executive with assignees in Australia, you will need to have an immediate HR and tax discussion with your assignees.

To read more about this change in Australia click here.

For further information about how this change will impact your assignees working in Australia contact:

Andy Carmichael 

Global Tax Senior Manager

E: andy.carmichael@activpayroll.com

T: +61 8 9488 7400 or

Graham McKechnie

Global Tax Director:

E: graham.mckechnie@activpayroll.com

T: +44 (0) 131 473 2325

10. UK Autumn Statement: UK Tax & NIC Changes 

Following the Autumn Statement issued on 29 November 2011, by The Chancellor of the Exchequer George Osborne, we have prepared an overview of the 2012/2013 Tax, allowances and National Insurance Contribution rates and thresholds.

Please note that these changes are for your reference only, and do not apply until the new tax year, beginning 6 April 2012.

To view the overview, please click here.

We will be in touch in the future, with more information about how these changes will specifically impact your UK payroll. 

To download a PDF version of this client update, please click here.

About us:

activpayroll is a leading global professional service organisation, providing integrated global and domestic payroll solutions; expatriate taxation services and online HR people management tools to over 700 companies in more than 70 countries worldwide.

With offices in Houston, USA; Perth, Australia; Edinburgh, UK and global headquarters in Aberdeen, UK, activpayroll has one of the largest and most experienced international payroll and expatriate tax teams in the world. activpayroll is a SAS70 Type II approved organisation and holds the highest level of BACS accreditation available.

To find out more, please visit us at www.activpayroll.com by clicking below

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It’s the quickest way to stay up to date with developments, and what we are doing.

Need some advice?

For further information about the subjects mentioned in this Client Update, please contact

Simon Wright

Audit & Compliance Manager

E: simon.wright@activpayroll.com

T: +44 (0) 131 473 2325

Any feedback about our bi-monthly publication?

We welcome any feedback you have for us.

Whether it’s positive news, critique or requests for future articles of interest to you, please contact Mark Farquhar via email at mark.farquhar@activpayroll.com

To download a PDF version of this client update, please click here.