The introduction of Real Time Information (RTI) by HMRC means all businesses will have to submit their PAYE records every month at the time at which they pay their staff. It will be introduced in April 2013** and then fully implemented by the end of September 2013. Here’s how to get ready:
1. Don’t bury your head in the sand — get informed
Get in touch with your software payroll provider now. You’ll want to know if your payroll software will be updated so that you can file your payroll data in real time come April. Be an avid visitor to the HMRC website. Even better, if you have a Twitter account, follow HMRC (HMRCgovuk) so that you’re up to date with a whole host of information relevant to changes in legislation. Many small business owners will be interested in reviewing the details of all commercial PAYE products.
2. Communicate internally and cleanse
Businesses of all sizes, and that includes owner-managed companies and sole traders, need to start cleansing their data now. These businesses need to communicate the reasons for data checks with their employees and get employees to provide and update information where necessary e.g. national insurance, home address, date of birth etc. If data is incorrect this will naturally cause problems such as incorrect tax and could lead to compliance checks from HMRC.
3. Think cost and time
While most businesses will have internet access, all businesses need to know if this access is good enough to provide information in real time. Also, is your computer hardware and payroll software able to process information in real time? You may face a one-off cost to upgrade payroll software and you may need to train an employee on new internal systems. Start making changes now!
4. Why bother?
You can’t hide from this. HMRC is in the process of deciding on the scale of penalties to put in place for those organisations that don’t comply. HMRC is considering a number of different penalty regimes. However, one thing is certain and that is HMRC will select a penalty regime that businesses cannot ignore.
5. Get professional help
If you haven’t got an accountant or tax advisor in-house, you may want to consider this as a service. A professional accountant, tax advisor or payroll bureau will be able to advise you on what you need to do to implement RTI. While professional help is another cost to consider, it may potentially save you in the future.
You could also jump online to “Find an accountant”, regulated by AAT.
Ian Whyteside is a representative on HMRC’s Employment Consultation Forum and a member of AAT (Association of Accounting Technicians).
** After this blog was published, HMRC announced a "relaxation of reporting arrangements for small businesses". According to HMRC: "Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th)."