Mon, 6 Feb 2012

U-turn on P45: leaver statement reform scrapped for RTI launch

HMRC is keeping the P45 instead of introducing a leaver statement as part of Real Time Information (RTI).

Regulations, as originally drafted, introduced a leaver statement for employers operating RTI to use in place of the P45 when workers changed jobs.

However, following consultation, HMRC has decided to retain the P45 for all employees.

An HMRC spokesman said: “Employers wanted to keep the forms because they maintain that P45s are widely recognised and widely used, not just by new employers, but by banks, tax advisers and public bodies, as evidence of identity.

“Although HMRC proposed to introduce a new leaver statement consultation suggested this would be confusing and likely to increase admin burdens.

“Employers and employees will continue to use the current forms P45 and P46 until all employers are reporting RTI. Once an employer joins RTI, starter and leaver information will be automatically captured as part of the Full Payment Submission. The forms will continue to be used to exchange information between employees and employers.

“We will consult employers and other intermediaries on what will be needed once all employers are reporting RTI.”

And Stephen Banyard, acting director general for personal tax, said: “RTI is on track and we want to work in partnership with employers and other stakeholders to make its introduction as smooth as possible.”

See also:

• Budget: HMRC to consult on PAYE penalties ahead of RTI
• Small firms lack resources to implement RTI
• HMRC says RTI will cost employers more than it first predicted