RTI - Irregular Payment Flag

abhishek-daniel

Irregular Payment Flag, long term unpaid absence, long term unpaid leave after statutory payments etc. and the potential that EEs are removed or marked as leavers by HMRC even if still employed and shouldn’t be.

There could be times when an employee will be removed from the databases and marked as a leaver by HMRC after they analyse submissions after a specific amount of time (usually 3months+), regardless if they were included in the original EAS and/or they have the irregular payment flag ticked. Even potentially after they had been included in FPS submissions and then subsequently have the irregular payment flag ticked, it could still occur.

This is all based on the fact that HMRC will check if employees have not been paid for a specific period of time and will treat them as having left that employment. To avoid that happening for employees who do not get paid regularly, we ask that you use the irregular payment pattern indicator on every FPS submitted for that employee.

So what key scenarios should we be aware of?

Scenario 1
The EE is on the system and was included in the EAS but has not been paid since April but they are not flagged as an irregular payment record – they will also not be paid for the next several months. The “first FPS” will include them; however subsequent “regular” FPS files will not include the EE as they have not been paid. This means potentially after 3 months of non-FPS inclusion, HMRC may treat them as a leaver.

We recommend that the irregular payment flag is ticked on. If this is done before the “first FPS” then this will be included with the EEs record and that should suffice. If the box is ticked after the “first FPS” is sent, we recommend sending an FPS for that one EE. You can create a FPS and choose to select specific employees for the submission. This method will allow you to select the employee who has not been paid this period.

Scenario 2
The EE was included in the EAS and FPS files for the past few submissions. However the EE should have the irregular payment flag selected as they are irregularly paid. They now have no work for the next 6 months. This means they will not be included in any future FPS until they get paid again. In this instance we recommend you switch on the Irregular Payment flag and then you can create a FPS and choose to select specific employees for the submission. This method will allow you to select the employee who has not been paid this period.

Scenario 3
Employees on maternity leave, long term sick leave or leave of absence and will not be paid for a period of three months or more – but you still regard them as employees need to have the Irregular Payment flag set on their FPS submission. We recommend that you ensure that the flag is switched on before the last payment is made to the EE. This will ensure that HMRC receive a FPS file with the indicator switched on for that EE. Remember that the following period (after their statutory allowance is complete) they will receive zero pay – which means they may not be included on a FPS (though it they have a tax rebate in the following months they will be “paid” hence included on the FPS). If you forget to set the flag before potentially their last FPS inclusion for a while, you can create a FPS and choose to select specific employees for the submission. This method will allow you to select the employee who has not been paid this period.

Scenario 4
If another situation appears where an employee does not appear on the FPS but is believed they should be, please contact support so we may investigate this further with you. In the mean-time remember there is always the workaround of forcing an FPS for the employee by specifying them during the FPS creation wizard.