A recent communication from HMRC has highlighted a potential problem with RTI FPS transmissions and your employees. Currently, with every FPS submission you send your employees address. HMRC only use this for new starters and then only a part of their matching process. HMRC have now explained how they plan to use this from April 2015 – see Extract 1 below. The key point to this is the bit highlighted in red. Further to this a second email was received – see extract 2 below. This details how you need to notify your staff.
Currently HMRC only accept and update employee addresses from employers on their Full Payment Submissions (FPS) in respect of their new employees. HMRC have conducted detailed data analysis which reflects that we are currently receiving new addresses from employers which we do not use to update customer’s accounts. This can lead to Tax and National Insurance correspondence being sent to old addresses and not reaching the intended recipient.
With effect from April 2015, HMRC will process changes to employee’s addresses for existing employees when we identify that a new address has been included on an FPS. Employees will be able to notify their employer they have changed their address and this can be included in their employer’s next FPS. The employees account will be updated accordingly. Employers must advise their employee they have sent this change to HMRC. HMRC customers will receive a notification their address has been changed via their on line digital account.
Employers are being encouraged to provide HMRC with the address of their employees on all submissions and report any address changes. HMRC appreciate that in the past the provision of address updates has not been essential but hope that in the future employers can be encouraged to provide HMRC with addresses on all FPS’s (including any new addresses for their employees) if they are able to do so using your software.
Further to our email, we have received a number of queries from software developers asking for a bit more background and clarification on the sentence…… “Employers must advise their employee they have sent this change to HMRC”. Please find below some background and clarification as requested.
HMRC analysis of FPS submissions shows that approximately 25% of submissions, that include a National Insurance Number (after the first FPS) include an address for the individual. HMRC does not currently automatically make use of this data. The data is only used once HMRC is made aware that the address it holds for an individual is no longer valid. For these cases HMRC staff manually check to see if there is a newer address within a recent FPS. The analysis further shows that the individual will often inform their employer that they have changed address but forget to inform HMRC. HMRC would therefore like to make full use of the data that it receives. All of the customer research we have completed in this area has led us to the conclusion that most individuals believe that their employer will notify HMRC of the change of address. Advice from our Data Protection Act experts has confirmed there is no legal barrier for HMRC to use the data it receives, but they did highlight that there may be an impact for the employer.
Employers already provide information about their employees to HMRC; including address data when they employ a new staff member. It is generally accepted that as part of that process the Employer needs to send information to HMRC about the new staff member including their address; thus the employee is aware that their address will be notified to HMRC. Employees may not make the same connection later in the lifecycle of their employment. To protect the Employer and ensure that they are compliant with the Data Protection Act, employees need to be made aware that their employer will be providing address data to HMRC during the lifetime of their employment. Individual notification, for each change of address, is not required. It is sufficient for the employer to make their workforce aware through general communications.
Providing changes to address during the lifetime of the employment will be voluntary for the employer. Should the employer/ pension provider not wish to provide that information to HMRC they can continue to submit ‘blank’ address data in subsequent FPS.