Employer Student Loans Sub Group - Minutes

Tuesday 24 June 2008 (10:30-13:00) New Nelson Suite, Somerset House, The Strand, London

Attendees

Jackie Petherbridge (FSB)
Helen Hargreaves (IPP)
Kelly Hayworth (LITRG)
Paul Jackson (Payroll Alliance)
David Malcolm (NUS)
Jackie McGale (SLC)
Kevin O’Connor (SLC)
Alan McLellan (SLC
Derek Ross (SLC)
Mark Sawyer (DIUS)
Gary Downes (DIUS)
Neil Morgan (DIUS)
Liz Cunningham (HMRC)
Janet Clayton (HMRC)
Alex Lawrence (HMRC)
Helen Glover (HMRC)
Norman Bryan (HMRC)
Christine Rowse (HMRC)
Angela Bell (HMRC)
Nick Mosley (HMRC)
Sandra Hainie (HMRC)
Stephanie Allistone (HMRC)
Neil Johnson (HMRC)

Apologies

Colin Ben Nathan (CIOT)
Don Macarthur (HMRC)
Pete Jukes (BCS)
Rosa Tormo (CBI)
Linda Pullan (Payroll Alliance)
Sylvia Bushrod (Payroll Alliance)
Norman Green (BCS)

1. Introduction and opening remarks

Liz Cunningham

EC welcomed everyone to the meeting and made apologies for those unable to attend. EC introduced new members David Malcolm representing National Union of Students (NUS) and Kelly Hayworth representing (LITRG)

EC advised that Janet Clayton was taking over from Sam Mitha and that this would be Mark Sawyer’s last meeting as he was moving on.

There were also some guests from SLC, Derek Ross and Alan McLellan and presentations from Stephanie Allistone and Neil Johnson from HMRC who would be talking about the Powers Review. Later on we would be joined by Gary Downes and Neil Morgan from DIUS who would also be giving a presentation.

Introductions were made round the table.

2. Action points carried from previous meetings and matters arising

1/050208

Alex Lawrence

42 day lead time

AL mentioned that the paper version of the E17 includes the wrong version of the SL2. An insert will be included with the correct information. The On-line version and CD-ROM contain the correct version. A question was asked as to when these would be available. It was thought the end of February.

Action - AL will confirm date of publication.

18 February 2008 – message included in email sent out with the minutes. minutes

24 June 2008 – Closed

2/050208

Liz Cunningham

A point was raised in that it was not clear from the notes as to whether the new version of the P45 will apply to online submissions. It will be all versions of the P45 from April 2009 onwards but it is the period between October 2008 and April 2009 which is not clear.

Action – To clarify if the new version of the P45 will only be available online from October 2008 to April 2009.

24 June 2008 – New P45 stationary will be introduced in October 2008 for both paper and online. The new stationary will run in parallel until the April as it is not mandatory until then.

Closed

3/050208

Liz Cunningham

A further discussion followed concerning the importance of stakeholder consultation, the need to raise the ‘repayments’ side higher up in the student finance process at student level and the involvement of DIUS and the SLC.

EC explained that a Student Loan Repayment Delivery Board (SLRDB) had been set up to give a lead at senior management level to closer working between the SLC and HMRC to implement policies and the recommendations of the 2005 Student Finance Review in England.

The SLC advised that they were working on guidance and had focus groups specifically for repayments to raise understanding at the time of application. However the concern was raised that this consultation is with borrowers and student loan customers are not just students but employers as well. The employers are customers, not stakeholders.

Action – EC to take to SLRDB to ensure that at stakeholder engagements that the employer Sub Group is included.

24 June 2008 – EC raised the issue at the SLRDB and from this Alan McLellan (AM) and Derek Ross (DR) were happy to attend this meeting. AM advised there were a number of SLC Stakeholder Forums but not all deal with issues around repayments. However it would be helpful to have employer representation at some of the forums. It was agreed that the Terms of Reference for the forum would be sent out with the minutes and if any employer representatives were interested they could contact Alan direct or let CR know and she would pass the details on.

4/050208

IPP

Guidance on completion of P46

HMRC aware that the guidance needs to be improved for borrowers and employers and are working on this. Reps asked when the guidance will be included in Employer Bulleting and Agent Update, eg if a borrower has two loans and the first is now in repayment, how should the P46 box be handled.

A further example of where more guidance is needed is where a borrower with the mortgage style of loan has ticked the P46 in error. This example was originally raised by IPP.

Action - IPP was asked for a copy of their guidance which they referred to in this example.

24 June 2008 – Helen Hargreaves will look into this and send a copy.

5/050208

Liz Cunningham

Guidance on completion of P46

HMRC aware that the guidance needs to be improved for borrowers and employers and are working on this. Reps asked when the guidance will be included in Employer Bulleting and Agent Update, eg if a borrower has two loans and the first is now in repayment, how should the P46 box be handled.

A further example of where more guidance is needed is where a borrower with the mortgage style of loan has ticked the P46 in error. This example was originally raised by IPP.

The SLC and HMRC are also working together to have a process so that both will be able to deal with cases where the P46 student loan box is ticked in error.

Action – EC to provide text for IPP to offer guidance to members on how to deal with situations where a person with a mortgage loan or no student loan at all.

Guidance sent out with the minutes on 18 February 2008.

Since then Sandra Hainie has followed up with guidance updates for HMRC internal call handlers dealing with P46 ticked in error either from the employer on behalf of the borrower or a borrower. Also established a specialist contact within our CSL own unit.

24 June 2008 – Closed

6/050208

Liz Cunningham

JP also suggested that a box for student loans should also be included on the back (employer’s side) of the P46.

Action – To look into feasibility of this.

24 June 2008 – EC had engaged with P46 owner within HMRC. The owner was unsure about the benefits of adding the box and needed some clarity. EC wanted to confirm if the purpose was as a reminder for the employer or would the box need to be captured online.

JP advised that the employer uses the back page as a checklist and having the student loan box there as well would act as a reminder. The box wouldn’t need to be captured on line as the employer uses the hard copies of the P46 as input documents.

EC advised that she would take this forward and they may want to come to JP to consult.

7/050208

Jackie McGale

P46 guidance

A separate point was discussed and it was confirmed that the SLC know when a borrower is due to enter repayment and guidance on completing the P46 could be included in the letter sent from the SLC.

Action – To review the letter and consider the possibility of including this guidance.

24 June 2008 – Currently not possible in short term as migrating all (around 500) letters between systems. Could consider including an insert which would be quicker. Agreed that once a draft is produced a sample would be sent to the group for review.

JP asked if leaflet could be made available to employers and this was agreed.

8/050208

Liz Cunningham

Repayment Holiday

A question was raised in that ‘as and when costings are reviewed would DIUS be happy for the group to see the costings?’ EC agreed to take this forward to the ICR Board and to convey feedback the group had provided on consultations more generally to DIUS.

Action – EC to take forward

24 June 2008 – Very high-level broad costings were done before the announcement but they were not thought to be a reliable indicator of the cost. DIUS working on refinements and will be doing an impact assessment in the future and costs could be shared at this stage

JP asked about the costs to an employer and would this be considered as it was the impact of holidays on the employer that was of greater concern for the group. JP asked that this be included and MS will take forward.

Mark Sawyer

9/050208

Liz Cunningham

Short tax return does not include student loans as self-assessment student loan borrowers get a full return. Suggestion was made that the short tax return revised to include student loans to make it easier for people. Would also be away of capturing borrowers with multiple employments.

Action – EC to take forward

24.6.08 – EC looked into this and was advised that there is a practical difficulty in that there is little room on the short return for more boxes. A draft copy of the 2008-2009 short return handed out to illustrate this.

In the short term there are no plans to include student loans on the short return but as the borrower population continues to grow it will be kept under review. Amendments will be made as and when the time is right.

JP provided an example of where the short tax return would be better which was for teachers in private tuition and self-employment. However there is a wider issue around whether a short or long return is better for student loan borrowers and need to wait on the evaluation of the new shortened version of the long return.

The point was also raised that it needs to be clear to student loan borrower that they should complete a full return and it was suggested that guidance should be part of the return as people don’t read guidance.

10/050208

Alex Lawrence

SA awareness leaflet

A leaflet similar to the one for employers has been developed. Once this is complete it is proposed to send out to the Group for comment. JP asked that she notified by phone due to problems with email.

Action: Send out draft leaflet for feedback.

20 March 2008 - Draft leaflet sent out and feedback received.

24 June 2008 - Closed

11/050208

Group

Project to improve guidance to employers

Asking customers for suggestions on areas of guidance needing improving as a priority. Areas for improvement raised at this meeting:

• salary sacrifice
• statutory payments
• ability to communicate more effectively with staff in HMRC, looking for a more personal dialogue

Action: Ask Group to raise this with members and feedback any areas of improvement.

24 June 2008 – Feedback issues were wider than student loans but would have an impact on student loans. Since then asked for feedback from employer representatives to feed into a joint event between SLC and HMRC. This feedback will be reviewed as an agenda item.

Closed

12/050208

Pete Jukes

Hoping to modernise IT system, looking to move student loan database onto National Insurance Recording System (NIRS). Currently working on the requirements, which raised an issue about Duplicate SL1s where Matt Bryant had sought some informal feedback from BCS.

Currently only get a duplicate when a paper SL1 is issued manually. New process is looking at re-issuing which covers all mediums. One scenario would be RLS, (return letter to sender), if two were sent out electronically (EDI or FBI) would it cause problems for customers? No major problems foreseen.

Suggested that HMRC work with suppliers ORACLE, SAP and TRENT to test this scenario.

Action: PJ will look into this possibility.

24 June 2008 – PJ had discussed with the suppliers and ORACLE and TRENT don’t have student loan clients but SAP has some and they have offered to help.

Closed

13/050208

Group

SLC - option to reduce over repayment of student loans

Handout of the presentation was provided which covered the key points
Action: Support or show stoppers to EC by 18 February 2008.

24 June 2008 – No feedback received - closed

1/271107

Liz Cunningham

Powers Review - student loans penalty alignment

EC and DW have been involved in this work for student loans. The new legislation that aligns penalties for incorrect returns will impact on the SA borrowers first from April 2008. EC, DW and MS have met with DIUS lawyers, who have agreed to amend the student loan Regulations.

The proposal is to extend penalties for incorrect end of year returns by employers to student loans from April 2009. DIUS have confirmed that they are prepared to align the legislation for this as well. This will mean that there is only one penalty regime for employers for all taxes/duties they administer.

Concern was raised about the way penalties will work in the future in that they could catch more people.

Action – When published, to send out the consultation document to the group, when it is publish and the group will feed back any concerns, which will be passed on.

5 February 2008 – The document was sent out on 28 January 2008 with a request for feedback by 6 March 2008

24 June 2008 – No feedback received - closed

2/271107

Kevin O’Connor

The other key issue has been the recent announcement concerning data security and the resignation of HMRC’s Chairman. This has resulted in a review of the ways HMRC transfers data and has impacted on student loans. However HMRC can confirm that there has been no unauthorised disclosure of student loan information.

Action – JP asked for an update from the Student Loans Company on their security review and if and how it will impact on employers.

5 February 2008 – All data processing was halted for review, which has now been completed. With the exception of two CD transfers all are up and running. The remaining two need password protection and encryption and are expected to be running again within the next week or two. There is no impact to employers as all starts and stops are on secure links.

24 June 2008 – All transfers back in place and no impact to employers

Closed

4/271107

Liz Cunningham

The change to the 42 day lead time has been highlighted in the October 07 Employer bulletin, there was an article in payroll software developer notes and details of the change are included, it will also go in the next Agent Update. Future guidance will also refer employers to the change of date. PJ thanked NB for his handling of an issue, which had been raised about the release of the style sheet and a new version is coming out at the end of November.

Action – To check this is still on schedule

5 February 2008 – Still on schedule to be introduced from April 2008. EC also advised that the removal of the 42 day lead in time has been publicised in the following places.

• The 2008 E17. The paper edition will go out within the next few weeks and the online version will be available on the HMRC Intranet site from April 2008.
• Guidance revised in the E13. Publication as for E17.
• The 2008 Employers CD-ROM. References included in the ‘Teach yourself section’ The E17 PDF and in the introductory ‘What’s new’ section.
• Notes For Payroll Software Developers. Articles published in February, September and November 2007. Next scheduled publication will be the Budget edition in March 2008 and we will be looking to include something there.
• Employer Bulletin. Published three times a year. Article published in October 07 edition. The next article will be in April 08.
  Agent update (AU) publication. AU4 due out on 21 February will contain an article.
• Working together publication issue 29 released on 23 January 2008 includes an article.
  In addition to that April 2008 releases of internal guidance, such as the CAG, the CSL manual etc and links to the HMRC Internet site will also be revised.

PJ asked if employers could be told about it now as payrolls due for payment on 6 April will, in some cases, close at the beginning of March, and AL agreed to provide information to be sent out now. Alex Lawrence.

Note sent out with the minutes on 18 February 2008

24 June 2008 – Closed

5/271107

Employer Reps

P45 redesign - In the past there have been suggestions and ideas of what could be put on the P45 form but we had been unable to take them forward due to the limited space on the P45. As a result of Carter and other factors the form is now in A4 size, which makes more space available for our possible use.

If space was available for our use some suggestions were to have a box for the total amount of student loans deducted in the current year for that employment. This would provide a customer service and save some borrowers having to keep hold of their payslips. This would only apply to part 1 and not parts 2 or 3.

Action – Employer Reps to provide their thoughts on possible student loan information on the P45

5 February 2008 –No feedback received but carry forward

24 June 2008 – No further feedback - closed

6/271107

Jackie Petherbridge

P45 redesign - In the past there have been suggestions and ideas of what could be put on the P45 form but we had been unable to take them forward due to the limited space on the P45. As a result of Carter and other factors the form is now in A4 size, which makes more space available for our possible use.

If space was available for our use some suggestions were to have a box for the total amount of student loans deducted in the current year for that employment. This would provide a customer service and save some borrowers having to keep hold of their payslips. This would only apply to part 1 and not parts 2 or 3.

With regard to the information JP asked if this would apply for week 1 or month, however the significance of this was not clear.

Action – JP to include feedback on the significance of W1/M1

5 February 2008 –No feedback received. Carry forward for JP feedback.

24 June 2008 – JP advised that you need to include the student loan amount deducted on part 1 and 1A to cover W1/M1 issue,

Closed

8/271107

Admin burdens on employers - One area of improvement was raised by CIOT which was for DIUS to avoid introducing new policies that increased the burden on employers, like the new repayment holiday. CIOT fully understands that, at times, it will be necessary/desirable to introduce changes that regrettably increase administration burdens for employers. The point was simply to ask what had prompted the change around repayment holidays, whether regard had been had to administration burdens on employers, whether a regulatory impact assessment had been completed etc? It would also be really useful to have some feedback on this.

Action – DIUS to provide feedback.

5 February 2008 – A note had been provided by DIUS.

‘The considerations leading to the Secretary of State's announcement on Repayment Holiday for graduates with Income Contingent Loans progressed quickly and did consider the impact on stakeholders including employers in broad terms.’

It was recognised that there would be more stops and starts which is an impact for employers. There had been no full Regulatory Impact Assessment (RIA) carried out before the announcement as it as at a high policy level and not due for implementation until 2012. It is when the legislation is to be changed that an Impact Assessment and formal consultation will be needed.

Discussion on admin burdens raised two key points in that there is:

• a need to make costings public
• a need for more visibility and early consultations with stakeholders

The SLC also advised that they are launching a brand new website focused on repayments and feedback would be welcomed from the group.

24 June 2008 – The introduction of the policy is not until 2012 and would include an impact assessment.

Closed

On a separate note PJ raised a point about the recently announced consultation ‘Benefits in kind and expense payments in the payroll – a fresh approach’. Had SLC been involved before the consultation document was issued to consider scope for alternative repayment arrangements? As this was wider than student loans EC advised that she would take this offline from the Employer Sub Group.

24 June 2008 - EC had reviewed and discussed with PJ. As there are no plans to change the Class 1 NIC the changes to benefits wouldn’t impact student loans but could be a danger if employer does not set up properly and wrong class of NIC taken which would impact of student loans.

EC asked the group if they would like to receive future consultation documents.

Group agreed this would be useful as they could look at implications of the consultation documents on student loans

3/050907

Norman Bryan

Annual reminders

Contact Employer Business Services to find out if we can get lists produced frequently and if so we will get paper lists.

5 June 2007 – This issue is about the annual reminders. Those expecting to be involved have agreed to accept paper lists as we are unable to produce lists electronically. Working with East Kilbride to put them in a position to send out the paper lists.

Continue to provide updates on progress

5 September 2007 – Pilot exercise up and running and reminders being issued although called annual covers various time periods. Will be reviewed after six months

Carry forward as agenda item for Feedback February 2008

27 November 2007 – carry forward

5 February 2008 – Feedback received had been passed for analysis but no outcome as yet. More feedback is being sought to do proper analysis and to establish the benefit to employers.

24 June 2008 – Will have analysis completed by next meeting and would make recommendations on that. Propose to present findings at next meeting but will have something drawn up to circulate with agenda.

5/050907

Helen Glover

Concern raised about the electronic P46 information as it can be based on an employer letter which may fail to include all the guidance for completing the P46.

Action HG will look to who in HMRC is involved in this and involve employers in the consultation.

27 November 2007 – Unable to find anything specific on this point at this stage.

EC advised that she had received an email from PJ which highlighted that there was a ‘business link tool’. It was agreed to pass to wider Employers Forum and ask for guidance on this to be included in the Agent Update and Employers Bulletin.

5 February 2008 –Business link tool is administered by BERR (The Department for Business, Enterprise & Regulatory Reform, previously DTI) It can found at Business link and the website provides more information.

The tool has references to student loans but no guidance on when the P46 box should be ticked. It might be possible to change the tool to reflect the guidance but would need a business case. PJ agreed to take part in discussions if this can be taken forward - Liz Cunningham

Paper P46s are no longer required from April 2009 as long as the same information is recorded and there is an audit trail - Angela Bell

EC will confirm when guidance is to be published, only information so far is in the Note for Payroll software Developers (see AP4/050907)

24 June 2008 – No further publicity planned but will ask that any further publicity includes student loans.

Issue around general guidance needed for completing the P46. Understanding that the main Employers Forum are taking this forward but need to make sure student loan interest is included.

6/050907

Norman Bryan
Helen Glover

New DfES regulations regarding the recovery of student loans from overseas borrowers:

• form P85 - To check whether SL2 is issued when P85 raised.
• someone goes abroad to work for their employer but remains on the UK payroll - to check regulations and report back on their investigations at next meeting

5 June 2007 – Meeting held between Norman Bryan (NB), Helen Glover (HG) and FSB to cover the concerns raised about P85 and P86. Following this HMRC spoke to a member of the ExPats team in Manchester. However there is a project looking at the P85 and P86 in general and all the issues have been fed into this. NB and HG will keep this under review and bring back when there is something to report.

5 September 2007 – Continue to wait on the outcome of the P85 and P86 project

27 November 2007 – No further developments to report.

5 February 2008 – HG had established that the P85/P86 project was now resourced and had been ‘kicked off’. HG will therefore be contacting the lead person to take our interest forward.

24 June 2008 – HG and NB has a meeting with the person leading on this from the Residency Unit. It was established that this form no longer meets the business purpose and different stakeholders including student loans have been identified and included. Work is being done on P86 to find out what each stakeholder wants from the form. Also working with customers who use this form. Suggestion that employers who have an interest should also be included.

7/050907

Employer Reps

New DfES regulations regarding the recovery of student loans from overseas borrowers: Send examples to Liz Cunningham.

5 June 2007 – None received
It was suggested that IPP may be able to provide a good source of examples. CIOT requested a copy of or a link to the regulations and he would check if he had any examples - Christine Rowse

14 June 2007 – Copy of regulations included with minutes - IIP

5 September 2007 – No further examples received but IPP would like an opportunity to give input.

27 November 2007 – Feedback had been received from IPP and they had provided a proposed consultation statement for their members. EC advised that she hadn’t yet responded to this as the paper raised other issues around borrowers working abroad. EC had reviewed the regulations (Statutory Instrument 2000 No. 944) and her understanding from R27 (b) was that if the employer was still making secondary class 1 National Insurance contributions (NIC) in this country then student loans should also be deducted.

This raised a further issue as the income for those working abroad might significantly increase as a result of benefits they receive when working abroad and this would mean that student loan repayments would increase, probably significantly. While this is a ‘consequence of the Regulations’ we will need to consider the practical application of the Regulations. HMRC, the SLC and DIUS will need to consider how to apply the legislation and if a policy change was needed would have to refer to DIUS - Liz Cunningham

A query was raised about stop notices and it was confirmed that a P85 does not generate a stop notice. It was also mentioned that a stop notice is not issued by the Student Loans Company, as the borrower will still be liable for repayments when they return to the UK. Repayments will be collected by the SLC through direct debit when the borrower is abroad and when he returns the deductions will continue through the payroll.

5 February 2008 – EC explained that in cases where someone is seconded abroad to work for the first year after they go abroad they are still liable to pay class 1 NIC. As student loans are based on class 1 NIC the employer should continue to deduct student loans but this rarely happens. The SLC process is for the borrower to advise the SLC that they are going abroad for more than three months and arrange to repay their student loan by direct debit. There is therefore a danger of double counting if both the employer and borrower make student loan repayments in the first year. A change to the legislation may be needed to avoid this position. This process is to be reviewed by the SLC and HMRC during 2008-2009.

24 June 2008 – Dealing with this on a practical basis when identified. SLC would not pursue direct debit if student loan deductions still being taken. Looking to document the process from an SLC and HMRC perspective but resources might not allow this to happen this year but will remain an open issue.

Sabbaticals could be an issue and needs to be considered.

3. Student Loan Sales

Neil Morgan
Gary Downes

Gary Downes (GD) explained that he was seeking an understanding of the purpose of the group. EC agreed to send him a copy of the Terms of Reference and explained that it is a two way consultation forum and involves employer representatives from a wide variety of organisations.

Action – To send Terms of Reference (1) Liz Cunningham

GD advised that in the beginning of 2007 the government made an announcement that it intended to pursue the sale of student loans. The purpose was to be able to compete globally and to inject money in to Higher Education. Student loans currently sit at £13 billion for 2007 but will rise to an estimated £60 billion over the next ten years and it is not felt appropriate to hold that growing debt on government books. The decision taken to sell meets the standard approach used in the commercial sector.

Deutsche Bank have been appointed by DIUS to advise and support a number of sales using a securitisation model. There are a number of structured projects in the Loan Sales Programme including:

• Transition Project – looking at the business change issues and impacts appropriate for all parties concerned.
• Finance and accounting project – looking at risk assessment, classification and value for money.
• Legislation project – new legislation needs to go through parliament. This has now been completed; it was a rigorous process and received uniform cross party support. Royal Assent is expected on 22 July 2008.
• Sales project – supported by Deutsche Bank, arranging the sale.
• Stakeholder and Communication - strategic stakeholder and communication activities involving cross government engagement, which will include this group.

Sales to go through on the basis that there is no impact on the borrowers terms and conditions as the loans sales go through; and no impact on the employers; it should be a seamless process.

The same processes within SLC and HMRC will continue but there will be requirements around interfaces with the buyer. New reporting requirements will be required to support the post sale processes. Information will not include anything of a personal nature for borrower or employer.

Nature of the information to be shared and the timing may be of interest to this group and further updates from loan sale representatives will be provided as necessary

JP thanked Gary for his talk.

The group were advised that if there were any queries they should be sent to Christine Rowse who would pass them on.

4. HMRC Powers Review: Late Filing, Late Payment and Interest

Stephanie Allistone
Neil Johnson

Stephanie explained that she has responsibility for ‘interest’ and Neil works on the Powers Team and deals with ‘late filing and late payment’. There is a separate consultation document for each aspect and consultation is open until 11 September.

A handout was provided which Stephanie and Neil discussed.

Action – To send out copies of the handout and consultation documents (2) Christine Rowse

During the discussion a number of issues were raised:

• One concerned the accuracy of in year payments as it is not until the end of the year that the correct figures are known. The employer may pay on time but not in the right amount.
• Presentation suggested no impact if payments made on time and accurate but there could still be an impact on employers as they may receive a visit to confirm accuracy.
• Concern about the interest penalty in that borrower may be penalised twice, through this and through the SLC. It was explained that when a borrower is in employment the deductions are the employers’ responsibility and any interest or penalties would be on the employer not the borrower.
• For Income Tax Self Assessment (ITSA), Self Assessment has its own set of rules for individual taxpayers, but there will be no double charging

After the initial consultation stage there would be further consultation at draft clauses stage. While there is no final decision there have been preliminary decisions. KH noted that the presentation suggested that no decisions had been made, but this didn’t appear to be the case if work had already begun on drafting clauses. Stephanie explained that policy thinking was the first stage to inform consultation, but the input from consultation would inform the final policy decision.

5. Update on work to develop a solution to reduce over repayments

Kevin O’Connor

Following on from the presentation given at the last meeting by Christine Henderson, KoC advised that little has moved on but he will provide some background and recap.

Because of the time lag in processing P14s SLC are unable to provide an up to date picture of the balance outstanding on a borrower’s loan account. They can only give the balance up to the last P14 held. While a true solution would be to have monthly statements, this is not an option.

An options paper was therefore draw up which covered several options:

1. Forecasting three months before the end of the repayment phase but lot of variables could affect forecast, for example salary increases.
2. Customer opts out the scheme and goes on to direct debit. This needs to be about two years before and they would also opt out of PAYE – preferred option
3. Mixture of 1 and 2
4. When it is recognised that an overpayment situation has occurred arrange for the refund to be paid quickly.

A fifth option was suggested by JP in that students need to manage their own affairs but more and better guidance is needed. KoC advised that guidance covers what students need to do, like keep monthly payslips. There will also be a facility available on line for students to check their balance.

The profile of the issue had risen because of the delays in receiving P14 information the previous year and the Minister had given a commitment to resolving the problem. However the problem will be reduced as P14 processing improves. A letter advising of a possible overpayment situation also goes out as part of the statement. Even with improved processing over-repayment will still occur. This aspect still needs to be addressed and the aim is to will allow those who are concerned to have an alternative solution.

The options paper did not make reference to the Loan sale, and a number of issues have been raised in relation to this and are being addressed. One issue was around arrears and what would happen if borrowers stopped paying their direct debits. A possible answer is to put people back into PAYE but there are no figures around this.

In summary as it will be a positive decision to opt out it is less likely that they will default.

KoC advised that SLC may need input on impact on employers before next meeting.

A question was also asked about whether a borrower can choose to go back into the ICR scheme and the answer was yes.

6. Employer representative feedback discussed at HMRC and SLC staff ‘Working Together’ meeting on 10 June

Liz Cunningham
Derek Ross
Alan McLellan

EC handed out a summary of the feedback received from the employer representatives. She proposed to cover some areas today but there would be further discussions at the next meeting.

Action – to set as agenda item for next meeting (3) Christine Rowse

Consultation

A key area of feedback was about consultation. DR spoke about the Belfry event, which was a SLC stakeholder engagement conference as part of the Customer First Programme. The focus of the event was on borrower repayment issues and DR acknowledged that although there were employer representatives at the meting it had not been the intention to exclude employer issues. The SLC focus on borrowers and HMRC focuses on employers but it is recognised that each needs to consider the other’s customer. While both organisations try to do this there is an interdependency to deliver, which is why the Student Loan Repayment Delivery Board (SLRDB) was formed.

An invitation was issued to the employer reps to join an SLC stakeholder forum. SLC were looking for someone with a background in online service who would bring an employer perspective to the forum. (see AP 3/050208)

A specific point on consultation concerned DIUS policy and it was proposed to have a DIUS policy rep at the next meeting to cover this.

Action – Invite a DIUS policy rep to next meeting (4) Liz Cunningham

Guidance

Another area of the feedback was about guidance and the employer reps were invited to provide specific comments on this, and HMRC would provide feedback.

Action – To provide specific comments on guidance by end of July. (5) Employer reps

EC noted that the feedback also had a positive note especially around 42 day lead time.

7. Update on Collection of Student Loan issues

7.1 Alex Lawrence

P14 processing

Processing is improving year on year and the current position is that over 950,000 have been sent to SLC as of 6 June. As the exact number of P14s expected is not know we work within a range of 1.3 million for the year, which represents 66 to 71 per cent.

For 2005-2006 no P14s information had been sent by the end of June, the first lot of 400,000 were sent on 7 July. For 2006-2007 over 600,000 had been sent by June. This illustrates the improvement and in a wider context

SA borrower leaflet

Alex thanked the group for their feedback and advised that some had been replied to directly. The updated draft has presented to Communications and Marketing who sign off the final version. One this has happened it will be sent out to the group. This leaflet will be used at Employer Talk events and will be available on the website.

7.2 Norman Bryan

CSL Modernisation Project

NB advised that the Project is still ongoing and we are progressing through the requirements sta

There is an opportunity to make changes to the P14 and the group were asked for their views on the ‘pounds and pence’ box
Currently there is only a ‘pound’ box as it is only necessary to show the amount of student loan in pounds not pounds and pence. With the HMRC online filing system, it was proposed that anywhere pence was not needed it would be pre-populated with a zero amount.

The group agreed that this would have little impact on employers and raised no objections.

7.3. Liz Cunningham

EC advised that HMRC are developing a new Charter for customers. This was announced in the Chancellor’s budget and work is at the informal consultation stage. It is expected to be launched when the next budget takes place.

EC will share the consultation documents with the group when published. (6) Liz Cunningham

EC also asked if the group would be happy to have a presentation on this at the next meeting and no objections were raised.

8. AoB

8.1

JP raised a query about the whether student loans were included in the works number update. JP said that employers do works number updates which align payroll works numbers with the works numbers held on HMRC Taxpayer records. She wondered if this process or a similar process could be extended to include student loan borrower information, so that the student loan IT system and employers’ borrower information would also be aligned.

Action – To look into this (7) Helen Glover

8.2

A query was raised about whether the dates for these meetings are advised to the Employer Forum as the date has clashed with another meeting.

It was confirmed that the dates of all our meetings have been notified to the Employer Forum as they have a central co-ordinating role.

8.3

This query was raised just after the meeting was closed.

JP had earlier advised that the Part 1 and Part IA were the pages of the P45 form which would need to be changed to hold the student loan amount. She later made the point that if the P45 parts 1 and 1A were changed to allow employers to record payroll changes after the date of leaving, the employee wouldn’t get an amended P45 showing any additional student loan amount. JP advised that employers do not provide these forms now only a letter to HMRC. If that’s the case then the employee wouldn’t have a full view of their payments.

Action - To confirm the current process for employers and associated regulations to determine if this is a problem. (8) Helen Glover

Future meetings

New Nelson Suite, Somerset House, The Strand, London

Tuesday 23 September 2008
Tuesday 25 November 2008