HMRC Alternative Pay Arrangements Does anyone have any experience of how to process payments under an APA where for pay for National Minimum Wage for "sleep-over" nights

Answer

I have managed to progress this a little.

HMRC set up the Alternative Pay Arrangements for situations where employers found out retrospectively that they had paid less than the National Minimum Wage.  Originally, this was believed to have occurred where a "sleep over" allowance for residential care staff was paid rather than an hourly rate. A High Court case (since overturned in the Court of Appeal) held that staff on sleep overs had to be paid at the national minimum wage for each hour they were on the premises and employers had to make arrangements to make back pay payments to current and previous employees.  A number of employers requested an APA to handle these back payments not now required, but to release the employer from the APA, HMRC required the employer to confirm that the national minimum wage had been paid in all other circumstances.  In our case there were a number of employees who had been slightly underpaid, mainly due to the recovery of a recently paid clothing allowance in the final payment to a leaver.

Under the APA the employer makes a one-off payment of the underpayment to the employee, deducting 20% basic rate tax.  It is also necessary to account for N.I. and pension contributions on these payments. These payments are reported to HMRC on a spreadsheet who then raise a tax assessment on the employer.

The question as to how to handle these payments in QuickBooks remains.  

  1. It appears that where the employee remains in service you can process the payment through the payroll in the normal way (if necessary using an unscheduled payroll) with the usual RTI submissions.
  2. For those employees no longer in service but who have left in the current tax year, it is also possible to process the payment through QuickBooks using the payment after leaving routines (resetting the employee status to active but leaving the leaving date, changing their tax code to BR, running an unscheduled payroll with a payroll end date set to their actual leaving date, but with the current payment date).
  3. For those employees who left employment in previous tax years, it appears you cannot process the payments through QuickBooks payroll - just process the actual payment as a cheque to the employee for the net amount and the tax payment to HMRC as another Cheque payment when you are required to pay over the tax after your APA submission.  You may also have to separately pay any pension contributions due.  The question as to how to deal with N.I. for this group however remains as HMRC guidelines state the details should be submitted in an RTI FPS submission and I cannot see how to submit previous years RTI submissions through QuickBooks - in our case the problem is rather academic as all the payments were so small as to fall below the N.I. Lower Earnings Limit so no NI contributions are due.
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