In November 2018, HMRC wrote to software developers announcing that the Earlier Year Update (EYU) RTI submission was to be ended from 2020. In its place, a “Year to Date FPS” would be introduced whereby employers report the correct year to date values rather than adjusting figures.
This was good news for the profession, as the EYU has long been considered inappropriate. The question has always been that it was difficult to amend HMRC’s year to date figures by making adjustments when we did not know what year to date figures HMRC were holding. Much better to actually overwrite the figures with the corrected amounts, knowing for sure that the figures in the payroll system were replicated on HMRC’s systems. The April 2019 Employer Bulletin acknowledged this saying that the change would “simplify the process and align HMRC systems with employer payroll records”.
2018/19 was to be a pilot year and employers could make changes to this tax year in one of two ways:
- The existing EYU functionality for 2018/19 and previous years or
- The Year to Date FPS for 2018/19 and subsequent year
But for tax year 2019/20 and subsequent years the only way to submit changes to HMRC would be by the Year to Date FPS (with the EYU remaining for years prior to 2018/19). The April Employer Bulletin did say that the move to abolishing the EYU would only be rolled out ‘if the trial is successful’.
On the 20th of August 2019, HMRC wrote to software developers and we are producing this in full:
“We previously advised that from 20 April 2019 we would be accepting Real Time Information (RTI) Full Payment Submissions (FPS) with 'Year to Date' information to make amendments to the tax year ending 5 April 2019. In order to evaluate the making of amendments using the FPS, we decided to pilot its use while continuing to accept Earlier Year Updates (EYU) to make amendments for 2018-19 where employers chose to do so. We originally advised that from April 2020, the EYU would no longer be a valid submission for 2019-20 and later years.
The initial analysis from the RTI FPS 'Year to Date' pilot has been very encouraging. We want to continue to evaluate these early positive results prior to making a final decision about withdrawal of the EYU. We have therefore decided to extend the pilot to include the 2019-20 tax year.”
So, depending on your software capability and functionality, 2019/20 remains another pilot year where the Year to Date FPS is voluntary.
Global Payroll Association Comment
In the light of this announcement, we suspect that developers will question whether to put the Year to Date functionality into systems, at least for 2019/20. Please check with your supplier.
More generally, it does seems as though the pilot year has not been conclusive enough for HMRC to have confidence in withdrawing the EYU altogether. So whilst we suspect that developers will put the brakes on functionality, this might be counter-productive as more testing and submissions are obviously needed as HMRC’s end.
In November 2018, HMRC wrote to software developers announcing that the Earlier Year Update (EYU) RTI submission was to be ended from 2020. In its place, a “Year to Date FPS” would be introduced whereby employers report the correct year to date values rather than adjusting figures.
This was good news for the profession, as the EYU has long been considered inappropriate. The question has always been that it was difficult to amend HMRC’s year to date figures by making adjustments when we did not know what year to date figures HMRC were holding. Much better to actually overwrite the figures with the corrected amounts, knowing for sure that the figures in the payroll system were replicated on HMRC’s systems. The April 2019 Employer Bulletin acknowledged this saying that the change would “simplify the process and align HMRC systems with employer payroll records”.
2018/19 was to be a pilot year and employers could make changes to this tax year in one of two ways:
- The existing EYU functionality for 2018/19 and previous years or
- The Year to Date FPS for 2018/19 and subsequent year
But for tax year 2019/20 and subsequent years the only way to submit changes to HMRC would be by the Year to Date FPS (with the EYU remaining for years prior to 2018/19). The April Employer Bulletin did say that the move to abolishing the EYU would only be rolled out ‘if the trial is successful’.
On the 20th of August 2019, HMRC wrote to software developers and we are producing this in full:
“We previously advised that from 20 April 2019 we would be accepting Real Time Information (RTI) Full Payment Submissions (FPS) with 'Year to Date' information to make amendments to the tax year ending 5 April 2019. In order to evaluate the making of amendments using the FPS, we decided to pilot its use while continuing to accept Earlier Year Updates (EYU) to make amendments for 2018-19 where employers chose to do so. We originally advised that from April 2020, the EYU would no longer be a valid submission for 2019-20 and later years.
The initial analysis from the RTI FPS 'Year to Date' pilot has been very encouraging. We want to continue to evaluate these early positive results prior to making a final decision about withdrawal of the EYU. We have therefore decided to extend the pilot to include the 2019-20 tax year.”
So, depending on your software capability and functionality, 2019/20 remains another pilot year where the Year to Date FPS is voluntary.
Global Payroll Association Comment
In the light of this announcement, we suspect that developers will question whether to put the Year to Date functionality into systems, at least for 2019/20. Please check with your supplier.
More generally, it does seems as though the pilot year has not been conclusive enough for HMRC to have confidence in withdrawing the EYU altogether. So whilst we suspect that developers will put the brakes on functionality, this might be counter-productive as more testing and submissions are obviously needed as HMRC’s end.