What is the Employers End of Year Return (P35)
WHAT IS THE P35?
Please NOTE: From 1 January 2019, the P35 is abolished in line with PAYE Modernisation.
When completing year end returns to Revenue only one return is submitted to the Revenue Commissioners via Revenue Online Service (ROS). This return is call a P35 (employers year end return).
WHAT IS THE PURPOSE OF THE P35?
The P35 states the total earnings and relevant deductions from the employee’s payroll. On submission of this statement, Revenue Commissioners will update each employee’s record accordingly, any shortfall in tax due will be collected from the employee by the Revenue Commissioners.
On completion of the P35 the Revenue have an up to date status for the employee’s record of earnings and taxes as at 31st December.
01st January is the start of a new tax year which sees the new budgetary items announced in the prior October take effect, most importantly for employers the application of new PAYE, USC and PRSI changes. To facilitate this all employee’s payroll starts new from 01st January with zero cumulative year to date pay and tax figures.
Only one P35 is made which will include all employees, regardless of how and when the employees are paid. This means that if you are running separate payrolls in order to manage various categories of employees differently or for confidentiality purposes (for example, management payroll is administered by a second payroll administrator) then all these should be amalgamated and submitted within the one P35 return.
CollSoft offers a consolidation process which will merge independently ran payrolls, with the same registered employer number, together for this purpose.
Once this P35 submission routine is completed within ROS, the ROS function will not allow additional original P35 submissions to be filed for the same employer registered PAYE number.
Additional or Supplementary P35 files, as defined by Revenue, may be submitted at a later stage.
The P35 return is a total statement of ‘relevant’ taxable items.
At the end of the tax year all payroll should be completed for every employee in every payroll frequency (weekly, fortnightly, four-weekly and monthly) operated by the employer.
WHAT TO INCLUDE ON THE P35?
There are a number of components to the year-end report to Revenue comprising the P35;
The P35 is the end of year statement submitted to Revenue by the employer. This includes all employees who were in registered employment with the employer during the 2018 tax year, this includes;
- new employees commencing in 2018 (with their date of commencement)
- employees ceasing employment in 2018 (with their date of cessation)
- employees who are still in employment but on leave (statutory leave, illness leave etc.) whether paid or not
- employees for whom a PAYE Exclusion Order is held and who continue to be paid through your Irish company
For all employees the return is a statement of earnings broken down by employee itemising:
- Employee PPSN
- Total pay subject to PAYE, USC and PRSI including Benefit in Kind (BIK) and pension contributions.
- PAYE deducted
- USC deducted
- PRSI deducted
- Local Property Tax (LPT) deducted through the payroll
- Commencement/Cessation dates
- Medical Insurance premiums included in BIK
- llness Benefit accounted for during the tax year
- Local Property Tax (LPT) deducted through the payroll
- PRSI Contribution classes (subject to 4, class A to take precedence)
- Pay frequency (weekly/fortnightly/four-weekly/monthly)
- Week 53 applicable
The P35LT reports all the above detail be employee for whom a PPS number is not held. While it is important that employers are vigilant of operating payroll in compliance with Revenue regulation it is all important to operate best practice such as obtaining all the necessary employee information immediately on commencement of employment. An employee’s PPS number is a vital unique identifier which links a payroll record to the correct tax payer account with revenue. Employers should actively seek to have a PPSN on file for every employee immediately on commencement or prior to processing payroll.
In the circumstance that an employee’s PPSN is not known then the Revenue require the employer to furnish the following information as a minimum for each employee;
- First name
- Date of Birth
These basic details will aid Revenue to match the payroll record to the correct taxpayer account on file, however this may not always be possible.
Employees without a PPSN on file at year-end will be reported on the P35LT of the P35.
The P35LF reports total relating to BIK and pensions. Individual employee details are not itemised but the subtotals of;
- Total BIK included in the P35L/P35LT gross figures
- Number of employees who made pension contributions
- Number of employees for whom the employer made pension contributions
- Total Pension contributions by pension product (PRSA, RBS, RAC)
In creating the P35 for ROS all components of the year end return: P35L, P35LT, P35LF are included in the submission so that it is a once only submission routine.
INTEREST, PENALTIES AND PROSECUTIONS
INTEREST ON P35 BALANCES
When a balancing payment is submitted with the P35 return and it exceeds 10% of the PAYE/PRSI/USC/LPT liability due for the year, interest is chargeable on the balance from 31st July of the tax year to which the P35 relates.
For example, 2018 P35 is filed with an underpayment greater than 10% of the final liability on 14th February 2019, interest will be charged from 31st July 2019 to 14th February 2019.
When a balancing payment is submitted with the P35 return and it does not exceed 10% of the PAYE/PRSI/USC/LPT liability due for the year, interest is chargeable on the balance from 14th January of the year (following the tax year to which the P35 relates) to date of submission.
For example, 2018 P35 is filed with an underpayment less than 10% of the final liability on 14th February 2019, interest will be charged from 14th January 2019 to 14th February 2019.
PROSECUTIONS AND/OR PENALTIES
Employers may face criminal proceedings for the non-submission of a P35 return. On conviction, a penalty of up to a maximum of €5,000 or to a term of imprisonment, or both, may be exerted at the discretion of the judge.
Failing to submit a complete P35 return by the 15th February deadline may result in a penalty up to a maximum of €4,000 and also risks a possible tax audit. If you do not submit a complete P35 return on time it may cause your employees unnecessary difficulty and delay when claiming social welfare benefits.
Revenue provide a complete P35 FAQ offering additional guidance in terms of employers Revenue obligations.