Statutory payment funding from HMRC

11371

Statutory payment funding from HMRC

6th April 2018

IRIS PAYE-Master, IRIS Payroll Business, IRIS Bureau Payroll, IRIS GP Payroll, IRIS Payroll Professional, Earnie, IRIS Earnie IQ

If you cannot afford to make payments to cover maternity pay/paternity pay etc. you can apply for HMRC to pay you in advance.

The cost of your statutory payments (excluding sick pay, SSP) are offset against your company PAYE liabilities (inc. Tax, Ees & Ers NI, student loans, deductions made from subcontractors (CIS payrolls)).

In situations where your PAYE liabilities do not cover the cost of your statutory payments, you can apply for funding from HMRC.

An application for advance funding should be made no more than four weeks before the first payment of statutory payment is due.

HMRC can impose a penalty of up to £3000 where employers either fraudulently or negligently claim advance funding for each employee concerned.

For information about applying for advanced funding of SMP, SPP, SAP, ShPP check gov.uk here.

Reporting statutory payment funding

Statutory payment funding is NOT reported to the HMRC as part of any RTI submissions.

There is nothing you need to report to the HMRC re: statutory payment funding and you would report any recovery / compensation amounts as normal on an EPS submission.

The HMRC will maintain their own record of the funding you have received.

Please Note: Since the retirement of the end of year p35/p14 routines, there is no requirement for you to record statutory payment funding in your payroll software.

How do HMRC recover statutory payment funding?

If you claim an advance of statutory payments, then the amount reported on an EPS is offset against the advance claimed. Normally, in situations where statutory payment funding is applicable, the recovery amount on the EPS will be greater than the deductions total on the FPS report,

Example

The FPS reports PAYE and NIC liability of £1800, and the EPS shows statutory payments recoverable as £2500. Normally in this situation, HMRC would recognise this company as in credit by £700. Where statutory payment funding is in place this £700 would “pay back” the funding. Over the course of your statutory payment, these credit amounts should balance the statutory funding amount.

If there is any advance amount still remaining at the end of the period the advance covers, this is owed to HMRC. This is payable by the due date i.e. the 19th of the following tax month the payment advance covers. If there is any amount due, this value should be added to and paid alongside the calculated remittance amount on your month end summary/P32/PAYE Remittance report.

Please Note: Since the retirement of the end of year p35/p14 routines, there is no requirement for you to record statutory payment funding in your payroll software.