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PAYE Real Time Information – Are you ready?

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16 November 2012

HM Revenue & Customs recently wrote to all employers with a PAYE scheme reminding them of the planned introduction in April 2013 of a new way of reporting payroll information. The system is called Real Time Information (or RTI).

HMRC will obtain PAYE information in a more regular and efficient manner when employers submit their payroll data in the new format each time their workers are paid. The RTI system has been the subject of a Pilot programme since April 2012. HMRC propose for a further 250,000 employers to be submitting their PAYE data using RTI between November 2012 and March 2013.

Whilst one of the benefits to be gained following the introduction of RTI is the removal of the annual burden of submitting P14 information for each employee and also an annual employer PAYE return (P35), in reality the new system will electronically provide HMRC with similar data in each RTI report each time a worker is paid. Employers will therefore need to ensure that their payroll information is complete, accurate and in a format that is acceptable under the RTI reporting requirements each and every pay run.

The current PAYE rules have enabled some employers to make payments to workers without the need for a PAYE scheme where payments have been below existing reporting thresholds. With the introduction of RTI all payments made to employees, even students in full time education, will need to be submitted to HMRC on or before the date that the payment is made. A PAYE scheme will therefore need to be registered if you make payment to any worker, casual employee or otherwise.

As RTI is an electronic based system those employers still operating with manual records to calculate their payroll will need to either purchase their own payroll software, use HMRC’s Basic PAYE Tools software or outsource their payroll to a professional payroll bureau. The Basic PAYE Tools software can be found on the HMRC website using the following link;

http://www.hmrc.gov.uk/paye/tools/basic-paye-tools.htm

RTI will require an increased discipline when recording the details of workers within your payroll software. By way of example, the RTI system will reject the use of initials in place of forenames, made up NI numbers and dates of birth. All of this information will be cross referenced by HMRC’s records each time a submission is made and rejected if wrong. Proposals for changes to the current penalty process for late or non submission of information to HMRC have been the subject of consultation. The outcome has yet to be determined but it is reasonable to assume that the rigid reporting requirements of RTI will have the potential for significant penalties for those who do not comply.

Qualification for the payment of PAYE liability will remain at either monthly, quarterly or annual intervals dependant upon the values and circumstances involved. However, RTI submissions will be required each time a worker is paid or at least each Tax month where no payments are made.

The quality and quantity of RTI reporting will involve additional input for employers. Outsourcing your payroll to a professional payroll bureau, such as Hazlewoods, will release you from the demands of ever increasing regulation and allow you to focus on your business. Our specialist knowledge, flexible approach to client requirements and the use of the latest technology enables Hazlewoods to deliver the best combination of services.

For more information on RTI or to discuss your payroll requirements please contact Roy Thorogood on 01452 634800 or at payroll@hazlewoods.co.uk