P45 Legal Obligations
Discussion
If someone leaves a job 'under a cloud', & the previous employer is dragging his feet/not playing ball, what are the legal implications of obtaining one's P45 from him? Is there a maximum time frame in which he is legally obliged to provide a P45? If he doesn't comply, can HMRC issue a substitute/replacement?? The issue would be the nuisance of emergency tax in future employment....
From the HMRC website:
1. Do employers have a legal obligation to issue a P45 when a member of staff leaves employment?
Yes. Employers do have a legal obligation to complete form P45 upon ceasing to employ an employee. They must send Part 1 of the form (in most cases online) to HMRC and provide Parts 1A, 2 and 3 to the ex-employee. The link to the guidance on our website covers this point http://www.hmrc.gov.uk/working/forms/paye-forms.ht...
2. In what time frame must this be undertaken ?
As stated in the extract from regulation 36 above, the employer must complete form P45 on the day the employee ceases, or if that is not possible without unreasonable delay. HMRC would generally consider it unreasonable if the P45 was not completed and sent to HMRC/provided to the former employee immediately after tax and any other deductions are calculated for the ex-employees final pay period. In cases where the employer uses payroll software, this often means the point at which the next payroll process run takes place.
Guidance on this point can be found under the Frequently Asked Questions (FAQs) on the HMRC Website: http://www.hmrc.gov.uk/employers/p45-employee-leav...
3. If a P45 is not issued for whatever reason what action does HMRC take?
If HMRC were made aware that form P45 had not been provided, HMRC would attempt to contact the employer by telephone first and, if there is no response or it is not possible to make contact by telephone, would issue a form P43 to the employer requesting they send HMRC the P45 Part 1 information. Consideration would also be given as to whether HMRC’s Employer Compliance staff should intervene to obtain the P45.
The employer is also responsible for providing this information within their Employer Annual Return (P35 and P14s) by 19 May following the end of the tax year. Failure to do this can result in a penalty being considered for failure to submit a correct return. Failure to file the return at all will also result in penalties being charged as well as further HMRC interventions to pursue the outstanding return.
However, I've often had to complete P46 forms when I've not had a P45 to hand quick enough to start a new job.
Some companies will use an emergency tax code, which is painful for a while, but great when you get the little windfall some months later. Other companies will calculate it more accurately.
1. Do employers have a legal obligation to issue a P45 when a member of staff leaves employment?
Yes. Employers do have a legal obligation to complete form P45 upon ceasing to employ an employee. They must send Part 1 of the form (in most cases online) to HMRC and provide Parts 1A, 2 and 3 to the ex-employee. The link to the guidance on our website covers this point http://www.hmrc.gov.uk/working/forms/paye-forms.ht...
2. In what time frame must this be undertaken ?
As stated in the extract from regulation 36 above, the employer must complete form P45 on the day the employee ceases, or if that is not possible without unreasonable delay. HMRC would generally consider it unreasonable if the P45 was not completed and sent to HMRC/provided to the former employee immediately after tax and any other deductions are calculated for the ex-employees final pay period. In cases where the employer uses payroll software, this often means the point at which the next payroll process run takes place.
Guidance on this point can be found under the Frequently Asked Questions (FAQs) on the HMRC Website: http://www.hmrc.gov.uk/employers/p45-employee-leav...
3. If a P45 is not issued for whatever reason what action does HMRC take?
If HMRC were made aware that form P45 had not been provided, HMRC would attempt to contact the employer by telephone first and, if there is no response or it is not possible to make contact by telephone, would issue a form P43 to the employer requesting they send HMRC the P45 Part 1 information. Consideration would also be given as to whether HMRC’s Employer Compliance staff should intervene to obtain the P45.
The employer is also responsible for providing this information within their Employer Annual Return (P35 and P14s) by 19 May following the end of the tax year. Failure to do this can result in a penalty being considered for failure to submit a correct return. Failure to file the return at all will also result in penalties being charged as well as further HMRC interventions to pursue the outstanding return.
However, I've often had to complete P46 forms when I've not had a P45 to hand quick enough to start a new job.
Some companies will use an emergency tax code, which is painful for a while, but great when you get the little windfall some months later. Other companies will calculate it more accurately.
Edited by mmm-five on Saturday 27th May 10:14
Bear in mind that with no P45 you should complete P46 and, if you tick the box saying this is your only job, and you've had a previous one in the tax year, then you should be taxed on emergency code 1150 L (month/week 1) which shouldn't affect you too much. BR is NOT emergency tax code. Sadly too many employers get this wrong.
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