CIOT backs HMRC P45 plans

The Chartered Institute of Taxation (CIOT) has backed HM Revenue & Customs' (HMRC) decision to retain the P45 issued to all employees leaving a job. The endorsement comes after HMRC originally proposed giving employers participating in the Real Time Information (RTI) programme with the option of using a leaver statement instead.

CIOT had already raised concerns over the issue during a previous meeting on the RTI programme back in October 2011. Following consultation with business leaders and employer representatives, HMRC has opted to keep the P45 system in place, which has been welcomed by CIOT's employment taxes sub-committee chairman Colin Ben-Nathan. Mr Ben-Nathan said that any change could have been premature and potentially confusing for employers and employees.

He noted that new employers would have had to grapple with a mix of freeform leaver statements and P45 forms with no procedure in place for ensuring the employee retained the document for his own use. "P45s are widely recognised and widely used, not just by new employers, but by banks, tax advisers and public bodies, as evidence of identity," he said. "Introducing an alternative document alongside the P45 without an adequate educational process and amendment of rules and training manuals would be confusing."