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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: real time information (RTI): RTI returns

Full Payment Submission (FPS)

The Full Payment Submission (FPS) is the ‘return’ an employer submits to HMRC each time they pay an employee. The FPS should include all their employees, see COG904220, and give full details of the payments and deductions.

The return is not a form in a prescribed format, such as the P35; it is a list of data items for each employee. The data is used to calculate how much an employer must pay to HMRC after the end of each tax month, or tax quarter if paying quarterly. The date the employer must pay their liabilities to HMRC has not changed.

Where an employer joins RTI part way through the tax year, the first FPS must include year to date details for all employees who have been paid at any point during the tax year. This must include employees who have left or have not been paid in the pay period.

Example

An employer joins RTI in September 2013. The first FPS (October) must include

  • all employees (including those below the Lower Earnings Limit)
  • year to date details of all payments and deductions

for the period April to September 2013. The employer will not be required to submit a Form P35 at the year end for the period from April to September 2013.

The final FPS for the tax year must be made on or before the date of the final payment of earnings for the tax year. For most employers this will be on or before 5 April, but could be earlier if the PAYE scheme is closing. The employer must indicate that the FPS is the final submission for the tax year and answer the end of year questions and declaration.

If the employer does not pay any employees in the final tax month of the year, the final submission will be on an Employer Payment Summary (EPS) and should be sent to HMRC by 19 April.

Where an employer becomes aware of an inaccuracy in an FPS and does not correct this by 19 April following the end of the tax year (see COG904250) they must correct the inaccuracy on an Earlier Year Update (EYU).

Employer Payment Summary (EPS)

The Employer Payment Summary (EPS) is used to report details of

  • Statutory Payments made which the employer is entitled to recover
  • NIC Compensation on Statutory Payments
  • Employment Allowance
  • CIS deductions suffered by limited company subcontractors only
  • when an employer has not made any payments to employees in a reporting period and they are not required to submit an FPS
  • periods of inactivity for up to 6 months when an employer does not expect to make any payments (this information is passed to ETMP to stop a charge (see below) being raised).

The employer submits an EPS when they want to claim a reduction for any of the above. An EPS can only be submitted for tax years when RTI has been operated.

The FPS and EPS are used by HMRC to calculate the amount the employer is liable to pay for a tax period. The ‘charge’ for each tax period is created in the Enterprise Tax Management Platform (ETMP) and is based on the year to date figure in the FPS less the year to date reductions claimed in the EPS.

The employer must report year to date figures on the EPS and not the amount they are claiming for the relevant month.

The EPS must be submitted before the 19th of the following month if the employer wants the deduction to be made from the amount they are due to pay for that tax month.

Example

To claim a reduction for June’s liability (tax month 6 June to 5 July) the EPS must be received by 19 July (at the same time as the June FPS).

If HMRC receive the EPS on 20 July the reduction will not be applied to the June liability and the employer will be expected to pay the full amount due on the June FPS.

The reduction will be applied to the July liability (6 July to 5 August).

Where an employer joins RTI part way through the tax year, the first EPS must include year to date details of statutory payments recovered, CIS deductions suffered, employment allowance claimed or NICs holiday recovered for the period prior to joining RTI.

Where an employer discovers an inaccuracy on an EPS in a previous tax year, they must submit another EPS to report the correct total year to date figures for all recovered payments within that tax year.

Earlier Year Update (EYU) to correct an inaccuracy

Where an employer does not correct an inaccuracy in an FPS by 19 April following the end of the tax year, they must correct the inaccuracy on an Earlier Year Update (EYU).

An EYU can only be used for tax years when RTI has been operated.

The correction on the EYU should only show the difference between the amount originally submitted and the correct figure.

Where more than one EYU is submitted, each EYU must only show the amount of the amendment from the last figures submitted.

Example

ABC Ltd submits a final FPS with a year to date figure of £10,000 for pay but later discovers that the figure should have been £12,000. The employer submits an EYU to show +£2,000 for taxable pay.

It is later identified that the actual pay figure was only £11,500. The employer submits a further EYU to show -£500. Details of FPS, EPS and EYU returns received can be viewed in EBS RTI view, see PAYE55010.

Where the employer corrects an inaccuracy under Regulation 67E(6) and 21E(6) of the PAYE and NIC regulations, interest is chargeable on any additional tax and NIC the employer is liable to pay from 19 or 22 April following the end of the tax year the EYU relates to, see COG904270.

Earlier Year Update (EYU) for late returns

Where an employer does not:

  • make a return (FPS) for a tax period and
  • provide the correct information on a later FPS or
  • provide the correct pay and deductions information on a later FPS by 19 April following the end of the tax year

they must submit the information on an EYU.

Calculating liabilities (‘the charge’) from information reported on RTI returns

On receipt of the information reported on the RTI returns, HMRC will

  • calculate via ETMP how much the employer is due to pay for each tax period (the ‘charge’) using the RTI data reported on the FPS and EPS
  • make sure the correct information is passed to the Department for Work & Pensions (DWP) for calculating and adjusting payments of Universal Credit.

The ‘charge’ for each tax period is based on the year to date figure in the FPS less any year to date reductions claimed in the EPS, for example Month 3 FPS year to date information less any year to date EPS reduction equals the charge.

From April 2013 all employers who are required to report RTI information will have their PAYE and NIC accounting records managed through ETMP (PAYE48200). All historical payment information will still be accessed using BROCS.

Disputed Charges

Where you have contact with the employer, and they wish to discuss an underpayment and it becomes apparent that the employer does not agree with the underpayment figure, you should follow the guidance in BGN41/13.