Skip to main content

Electronic Filing

Volume 455: debated on Wednesday 10 January 2007

To ask the Chancellor of the Exchequer how many large companies with several small pay-as-you-earn reference numbers have been successful in claiming the incentive payments for electronic filing for small employers on more than one occasion within the year; what steps have been taken to ensure that such claims are not made successfully; and if he will make a statement. (113260)

Any employer who applies to split an existing payroll for PAYE purposes into a series of smaller payrolls must make an election under regulation 98, SI 2003 No. 2682. Each election is considered on its own merits. Where there is evidence that the motivation for such an election is to qualify for incentive payments, which are only available to small employers, the application will be refused.

The Government had anticipated this might be an issue and regulations are in place to address it (Regulation 99, SI 2003 No. 2682).

HMRC does not keep statistics on the number of rejected elections, but there is no evidence from compliance activity undertaken that there has been abuse of the system in this way.

To ask the Chancellor of the Exchequer what his original estimate was of the cost in each year of the incentive payments for electronic filing for small employers in each financial year that the scheme was set to run; for how many years those payments are planned to continue; how eligibility for the payments is determined; and if he will make a statement. (113261)

The original estimate of the cost of online filing incentives was £420 million, broken down as follows:

£ million

2005-06

140

2006-07

2110

2007-08

3110

2008-09 to 2009-10

4160

1 In respect of 2004-05 returns.

2 In respect of 2005-06 returns.

3 In respect of 2006-07 returns.

4 In respect of 2007-08 and 2008-09 returns.

Since then the estimates have been regularly revised to reflect the success of converting small employers to filing their PAYE employer annual returns online. These estimates are approved by Ministers and details are provided to the Treasury Select Committee.

To qualify for the online filing incentive the employer must:

have fewer than 50 employees (the number is determined by a count carried out every year by HMRC of employees within each PAYE scheme);

successfully send their employer annual return online;

send a return that is required under the PAYE regulations—that is, means a completed end of year pay, tax and national insurance summary (form P35) and a completed form P14 for at least one employee; and

only be established, employ employees or make payments of PAYE income wholly or mainly for permissible purposes (Regulation 6(5) SI 2005 No. 826.)

To ask the Chancellor of the Exchequer how much was paid in incentive payments for electronic filing for small employers in each year for which figures are available; and if he will make a statement. (113262)

A total of £225.2 million was paid to small employers in 2005-06.

These payments related to 2004-05 PAYE employer annual returns submitted to HMRC.