Employers need to be aware that from tax year 2016/17, a new Generic Notification Service (GNS) message will be added to the list of other helpful correspondence from HMRC. These were announced by HMRC via April 2016’s Employer Bulletin (page 8). To be precise, these are not messages, these are ‘prompts’. It is important that employers are aware of these, as they could be arriving any time soon.
What is a prompt?
The prompt will be generated in the circumstances where HMRC thinks that an employee should have Student Loan (SL) deduction but the Full Payment Submission (FPS) has not indicated that one has actually been made.
This is not about the employer having made a deduction against the wrong Plan type, it is about the employer not having made a deduction at all. They are new from 2016/17.
Where will I find them?
This new GNS will appear alongside messages about late filing of the FPS, tax code notifications etc. It does not impact software. If you are able to receive and view other GNS message, you will be able get these prompts.
What do I need to do?
On receipt of ‘No Student Loan Deduction Prompt 1’, this will be an immediate indication to the employer that HMRC was expecting a deduction to have been made from the employee but one was not made. Employers need to:
- Refer to any SL1 Start Notice that they may have received and ensure that this is recorded in the payroll system. If applicable, a deduction will commence in the next pay period
If a SL1 has not been received / there is no SL recorded, they need to contact their employee and ask the relevant starter questions to ascertain the relevant Plan type (i.e. Plan 1 or Plan 2). Having ascertained the Plan type, ensure that this is recorded in the payroll system. As above, deductions should start from the next pay period, if applicable.
What if I don’t act on the prompt?
If the next FPS still does not show a SL deduction that HMRC were expecting, they will issue ‘No Student Loan Deduction Prompt 2’. Essentially, the employer has to repeat the above action points, though with, perhaps, a little more urgency.Prompt 2 is HMRC’s nice way of saying ‘we were expecting a SL deduction from this employee and you haven’t made one’.
What if I still don’t act?
Things get interesting, is all I can say. If the next FPS still does not show a SL deduction for the employee, HMRC say that ‘we may contact you by telephone to ensure you start to make deductions’. I can only assume that the reason that they ‘may’ contact the employer is that they will also look at the FPS for information such as the value of NI’able pay in the pay period and whether there was a Council Tax Attachment of Earnings Order (CTAEO) in place. Both of these affect the deduction that can be made, so let’s hope they are armed with all the information before they pick up the telephone.Assuming that they have done their research, quite what they will say over the telephone is another thing – will HMRC be instructing us to make a SL deduction from our employees by telephone now? This seems a bit of a backward step in an environment where HMRC don’t want us calling them.Of course, this is assuming that the employer will provide answers to the security questions that HMRC will undoubtedly ask. When someone calls me saying that I have to go through security questions before they will talk to me, I will, more than likely, tell them to write!
What’s the point?
I fully understand the intention of the prompts – HMRC want the employer to make a SL deduction and, for whatever reason, one has not been made. Wouldn’t it have been simpler for HMRC to send another SL1 Start Notice rather than spending money developing these prompts? It is more than likely that the reason that the employer is not making a deduction is because they have not been told. If HMRC know that a deduction is to be made, just tell us again, but not over the telephone.
Why shouldn’t it have come as a surprise to me?
Information about these prompts was there all along in the minutes of the ‘Collection of Student Loans Consultation Group’:
- Point 7 of the minutes on 14 December 2015 – having said that, there were more industry representative apologies for non-attendance than attendees on that day
- Point 3 of the minutes on 08 March 2016 – almost 50/50 on industry representative apologies compared to attendees. What is interesting about these minutes is that HMRC are going to establish a log of the reasons why they contacted the employer. This will be reviewed in June 2016, reporting to the Consultation Group in September.