The IPP reports that there have over the years been many enquiries asking what importance HMRC places on the leaving date on the P45 form. Some believed that HMRC used this date to ascertain what the tax period was, whereas others believed it was not used at all. The IPP have now received clarrifiation from HMRC on this issue.
The date of leaving is not a concept for PAYE purposes. Regulation 36 simply says an employer has to complete a form P45. 0n ceasing to employ an employee and this is echoed in table 2 the date on which the employment ceased. So it is up to the employer to determine that date in accordance with general employment law. We are relaxed about what date the employer chooses.
This does not always have any relation to the date of the last payment. This does not cause any problems in validations. Whilst this did sometimes cause tax table discrepancies for COP (the previous PAYE system) we have included an extra check on the PAYE Service so that the pay and tax are checked against the tax period included on the P45 Part 1 as well as the tax period the date of leaving relates to. This will ensure we only get Work Item exceptions for genuine tax table discrepancies.
It is important to remember to record the correct leaving date of an employee for all matters pertaining to employment law, for example redundancy payments.