subject: How To Comply With Hmrcs New Regulations On Real Time Information [print this page] Employers will need to turn on to the digital age as HMRC expects Real Time Information (RTI) from April 2013. NWN's Nick Lawrence explains the implications.
By April 2013 all but the largest employers will need to report the PAYE situation of their employees in real time. Termed Real Time Information (RTI) by HMRC, this information must be supplied as soon as details change and must be posted online.
HMRC has introduced RTI to support Universal Credit which is set to will replace a variety of income-related benefits and credits. It's also part of HMRC's drive to become part of the digital world. But this has implications for businesses, particularly SMEs, in ensuring that they, too, are digitally up to speed.
An electronic return will be expected by HMRC on or before a payment is made to an employee. The aim is to simplify the payroll process in the long-term. By ensuring PAYE information is current, HMRC can constantly update tax codes, meaning fewer underpayments and overpayments.
However, there are critics of the new system who are concerned about business' ability to comply with the new regulations.
For example, the Institute of Chartered Accountants in England and Wales (ICAEW) is warning that reporting obligations may become more onerous. Businesses which pay their employees in advance so that they can survive financially may only be allowed seven days for an RTI return.
Companies which employ extra staff at the last minute - such as music festivals or restaurants at seasonally busy times - will have an additional burden if they run a monthly payroll and could be liable to penalties if they file their online return late. While HMRC is proposing leniency in some cases, particularly in the months after RTI's launch, this may only amount to seven days' additional grace.
There is a solution, and that is through payroll software. For larger companies, with their own in-house payroll functions, RTI should not pose a significant challenge. However, many smaller organisations are not currently using any software for their payroll, or have labour-intensive, and potentially non-RTI-compliant, systems.
The digital age is well and truly upon us and the days of non-computerised payroll are numbered. As a result, businesses need to ensure they have the necessary software to do the job.
A cost-effective alternative is to outsource the task to an expert Payroll Bureau which is already geared up to provide digital reporting quickly and efficiently. This service is provided by most larger chartered accountants.
