The draft regulations for 'real time information', whereby playslip data will be transmitted to HMRC at the time employees are paid rather than once a year, would have seen P45s replaced with a leavers statement - essentially the last payslip. Following consultation with employers, this will no longer be the case.
John Harding, tax director at PwC, said:"These days many employees have their payslips on-line. HMRC's assumption that a leaver would be able to access an online payslip to pass on to a new employer after they left was always open to question. In addition payslips these days often contain more data than the P45s and some employees may have felt uncomfortable divulging extra details to their new employer. For employers involved in piloting the new system there would also have been logistical problems around being able to process both leavers statements and P45s during the initial trial phase.
"We commented on these issues during the recent consultation and I am pleased that HMRC has listened to some of the concerns our clients raised, but this shouldn't detract from the bigger challenges around PAYE reform. Combined with automatic pension scheme enrolment, employers face a maelstrom of payroll changes all happening at once. Any glitches in this area can have damaging ramifications - concerns over leavers statements/P45s pale in comparison."
The Chartered Institute of Payroll Professionals (CIPP) welcomes the decision by HMRC to keep the P45 after HMRC abandoned plans to introduce a Leaver Statement for employers participating in the Real Time Information programme.
Having consulted with employers, HMRC announced the u-turn this week following a lack of support from professionals.
Helen Hargreaves, senior policy and research officer at the CIPP, added: “The CIPP Policy Team is pleased to see that HMRC has withdrawn plans to introduce the Leaver Statement. The P45 form is recognised by employers and employees alike, and at a time of great change, removing this form and replacing it with something else would have created unnecessary confusion. The CIPP has voiced its concerns with HMRC and is delighted to see that HMRC has listened to our views, and those of other interested parties, and come to a solution which addresses those comments.”
With the Real Time Information pilot on track for 2012, HMRC is keen to work with employers to ensure the introduction is smooth. HMRC announced the go ahead for RTI in April 2011 and the introduction will be the biggest change to the PAYE system since its inception in 1944. The pilot begins in April 2012 and will see three hundred companies take part.
