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Do you charge your clients for RTI?

As the RTI comes to live shortly there is an amount of work involved to ensure that you have all information about your clients correct, both business and each individual employees' information.

Therefore my question is if anyone of you think of or will charge your clients for the preparation work for RTI?

If you will charge, how much would be appropriate?

Any thoughts would be appreciated.

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Maybe!

We sent all clients a letter advising them of what RTI meant for them and what we needed them to do.

We put a paragraph in there;

"Obviously we are very conscious of any increased costs to you in the current economic environment and on an ongoing basis there should be no extra cost to you due to the RTI scheme.

However, I hope you appreciate that ensuring your payroll data is ready for RTI will for some businesses take extra time and therefore we may need to make a small charge for the administration of this"

There is no set rule as such, but we estimate charging roughly 60% of our payroll clients. At this stage we are unsure of the amounts, but it shouldnt be much more than £100 each.

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£100?

... for checking that the payroll work you have done and charged them for in the past was up to standard?  You should already know the employees' details - surname, forename, gender/title, date of birth, NI number and address - and have it on on your payroll system.  You will need it anyhow to produce the 2012/13 forms P60, so it is not a new requirement of RTI.

The only additional mandatory information is the basic weekly working hours in 3 bands (up to 16, 16 to 30 and 30+ hours).  If you have a portfolio of very large payrolls or of ones with a variety of working patterns within the payroll, I can appreciate that it might take half an hour to enter, but £100 for 60% of your payrolls seems OTT.

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£100 is too much

All you are going to do is press the button that validates the RTI information in the payroll.

I use moneysoft and tried 4 payrolls this morning.  RTI validation, within the programme, took about 20 seconds per payroll.  Results so far 6 employees that have failed validation, on inspection 5 of these were all supposed to start work during this tax year at various pubs and never did so we had incomplete details.  As they have not worked they have been deleted.  1 employee seems to have got on without a date of birth or an address.  Quick email to client to get details for me.

4 payrolls 15 minutes work.  I will not charge as I have cleansed the data for this year's P35 and if I did it would not be £400.

This is new to all of us but I think we are worrying about something that we already do ie check we have the right data before we process a payroll.  The big step is when we send our data to HMRC and see what they hold, but this is outside our control so there is little point in worrying about this until we have done it.

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@Euan

I am sure all your clients employee's always inform the client of changes in personal details, (and the client provides you with those details) and always provide the complete information for new starters. Unfortunately our's don't.

I am sure all of your clients have also responded, correctly, first time to the information you have asked them to prepare / check. Unfortunately, a lot of our's don't

Nor do we have the Corporation tax reference / UTR for each client on the payroll system

Nor do we have passport numbers for non-UK nationals

Nor do we have the contracted hours of work

etc etc

If we spend a significant amount of time inputting this data, then we will consider a charge. Why shouldnt we?? For some we will waive this, for others we won't.  At this stage its difficult to know how many fee notes we will raise and the amounts of these as the data entry has not been completed.  For some of the larger employer's it may even be in excess of £100!

 

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competitive advantage

I see RTI as a good thing for my business.  I am confident I will be able to cope with it seamlessly and without any fee increases, albeit nationally I expect it to be a shambles.  There is not even a dedicated RTI helpline, for Pete's sake!  the biggest change to PAYE since 1944 and you joint the queue of folk with a myriad of other queries.

Locally, I believe a few competitors could get in a mess over this, some already seem to be shaping up to shamelessly gouge clients on the basis of RTI.  Inevitably a fair percentage of those will start looking around, that's where I come in.....

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I expect a little extra work but I don't expect increases in charges to be significant.

 

That is - of course - provided I don't have to chase information.  I've made my clients aware that I'll be charging extra if I have to do that.  The ball's in their court.

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Thank you

thank you for all the answers, it much aprreciated!

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I actually think it will increase my costs

Currently our payroll is run on the same day every week and my payroll person comes in to do only that work.  Given that we have to give clients an opportunity to review the payroll before submission to HMRC I cannot see a way of performing the payroll calculations and the submissions on the same day for the majority of our weekly payroll clients, even though their payroll is sent electronically. Some clients are a nightmare and regularly "forget" to tell us about overtime, sickness, holiday pay, changes in pay rates or even that staff have joined/left etc so asking the clients to review the payroll in my view is a necessity. Monthly clients are not a big issue.  The way I see it is either I take time away from more lucrative paid work to do the submissions for the weekly payrolls for a fair few clients or I will need to pay for extra hours from my payroll person, either way there is a cost involved.  

Certainly there have been additional costs in terms of manhours for data cleansing (although this has gone fairly smoothly) and information letters to clients, additional training etc.  It is not as simple as HMRC and indeed some others on this site make out as each individual clients payroll needs are different (some weekly, some monthly, some four weekly, directors who pay annual salaries etc) and we have to accommodate and educate them to the changes.  I don't have the luxury of a team of people or a fulltime member of staff that can just absorb this additional work into their routine. So for me an increase in payroll fees for RTI may well be a necessity rather than an option. So far I have not considered charging the client for the data cleansing process, but I am certainly considering a review of my fees from 6 April going forward.

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£100 is not enough!

Its got to be on a client by client basis - we have some who are a dream to work with and some who are nightmares. Most clients see HMRC as someone they deal with once a year - they are too busy running their business to worry about HMRC so see no need to get prepared for RTI - it is just another administrative burden for them to bear - so they ignore it.

 

"We already have the client information from past P60's" - really?? Can you guarantee that it will align with HMRC's? How many employees have middle names that they haven't told us about? I am known as Ken, have been for many a long year, but back in 1969 did I put Kenneth on my form for HMRC? I can't remember and I suspect there are thousands out there just like me. 

I have had to ask clients up to 4 times before they have admitted that they have the early start letter - all this is my time and has to be paid for somehow.

Risk? There are two risks as I see it, risk of penalty claims from a client, and risk of losing a client because they blame us for RTI and all the troubles it brings.

 

If I was still a small employer with lots of part time staff, all paid on the different days they worked, then I would seriously have considered getting rid of them to avoid the extra work and penalties from RTI. 

 

RTI looks like a meltdown situation coming in April to me, along with a negative impact on the business community as a whole and an increase in the black market as people decide that it is just easier & quicker to pay "cash in hand".

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I am a freelance IT contractor operating through a Limited Company.  It has been trading for 15 years and employs my wife to maintain the books and liaise with my accountant.  She's employed as the Company Secretary and I am a Directory.  We currently each get a monthly salary, paid net of tax and NI and our accountant sorts out the amount of tax and NI to be paid annually.  It has worked seamlessly and usually salary increases only occur once per year i.e. we know in advance how much will be paid each month.

I've just confirmed with my accountant that we will continue to pay the same monthly amount as last year for salary and he's informed me that he will now be charging £20 + VAT per month to process this information through Real Time PAYE.  So, my company is being asked to pay an extra £240 + VAT per year for something that gives no benefit to it and, from what I can tell, involves very little effort from my accountant.

I'm not happy!  This will probably prompt me to look at the fees of other accountants in my area.

Just thought I would give you my thoughts from a "clients" perspective.

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Extra costs for accountants

Here's how I see it:

Extra learning / education (in my case at last count 140 documents over the past two and a half years)Extra payroll processing time for "simple" director/secretary only schemes - 12 actions or more a year rather than twoExtra software costs (I am aware of of one accountancy practice being charged a £ four figure amount by their software supplier for the combination of year end carry overr, RTI implementation and software capacity increase)Extra staff training costsExtra client education costsExtra time to be spent if a year in advance payroll summary is required by the client (as opposed to software & HMRC requiring monthly processing, 12 times a year, some software will not produce year in adance reports)

Item 2 is the real bugbear: having to submit 12 reports a year to HMRC instead of one.

Under the old scheme it was very efficient (ie. low time cost):

Action 1: Produce a year in advance summaryAction 2: Produce year end reports to HMRC

HMRC claim that the new scheme is better for busness and saves costs.   Personally I find 12 payroll runs more costly in time terms than the previous arrangements of visiting the payroll records file twice in a year.

For those businesses who are victims of RTI their complaint should be against the Government &/or who were not fully honest about the extra costs involved with RTI for small businesses in particular.

To sum up RTI has imposed additional costs and responsibilities.  So, who pays?  Are accountants to be charities who should absorb the costs?  No, I'd be surprised if we as accountants would have clients who would absorb government-imposed costs when they provide services to their own customers.    The way forward for small businesses who are victims of RTI (and iXBRL) is to make a choice:

Deal with RTI themselves (and probably then realise that £20 a month is a bargain to be relieved of the payroll operation burden)Be happy to pay a fair fee to their accountants to take the burden off their hands (shop around if need be - personally I regard £20 a month good value for a firm of accountants to charge - myself personally working from home I would quote at least £30 per payroll run to any new clients as I'm no fan of payroll processing and the consequent imposition of monthly obligations on me

I haven't mentioned that in some cases reporting to HMRC can be as high as 64 times a year under RTI - (52 weekly FPS reports + potentially 12 EPS reports) - now, someone might just be able to explain how 64 reports a year to HRC saves on costs compared to one year end report!

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Bugbear

For me, any extra costs will be in getting the client to verify the information before submission. Last year, he could ring me on Monday and tell me he'd changed last Friday's wages.  Now he can't - so I have to prepare the wages maybe Tuesday, send them to him, get him to approve them.   Do I need a physical signature ?  Hmm - probably not - that would save time.

And then there's the issue of tying everyone down on payday to make sure that all this is done. HMRC may have nothing else to do but I have. 

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My approach

I have kept all fees fixed and believe that RTI will in the end add nothing to my cost base.

1.  All directors will get quarterly payslips - previously monthly - unless they also have other monthly payroll people.

2.  All clients who were weekly payroll have now moved to monthly.

3.  Some clients who would have faced extra charges - all staff under LEL but retaining an employer reference - have axed their employer reference.

If HMRC make such a mess of it that there is extra time involved, then any additional charges will be forewarned.  But the plan is to assess anything like that a year from now.

As I have posted before, it seems to me that lots of accountants are making a big hoo-hah about this for no real reason.  The system is going to be swamped with our submissions.  I previously predicted late April or early May for the first database crash, it seemed to happen on day 1 in fact.

No way is anyone going to be checking the fine print, no way is the database going to be smart enough to identify any errors other than huge great ones staring it in the face.  The backlog from year 1 is going to take most of year 2 to clear.

So my message to clients is file on time, pay on time and forget about the twits in HMRC.

 

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Do your clients operate in the real world?

mr. mischief wrote:

I have kept all fees fixed and believe that RTI will in the end add nothing to my cost base.

1.  All directors will get quarterly payslips - previously monthly - unless they also have other monthly payroll people.

2.  All clients who were weekly payroll have now moved to monthly.

3.  Some clients who would have faced extra charges - all staff under LEL but retaining an employer reference - have axed their employer reference.

 

I am wondering if all of your clients operate in the real world.  Whilst some of my clients have been able to make changes to their payroll to make life under RTI easier, it is not that easy for most of them.  Changes to payment of wages must be by agreement with the employees and trying to change wage payment intervals for employees that have been traditionally paid weekly is not as easy as you make out.  One of my clients was threatened with an all out strike if the wages payment period was changed, the workers were just not willing to work with the employer on the issue, and in times when it is hard enough to make ends meet for the average family who can blame them for not wanting to wait a month for their money.  When faced with the problems and costs a strike action would create, operating weekly pay under RTI was by far the least expensive option for my client.  Have you also considered that some employers may like to pay their workers weekly - a way of paying as you go so that they are more in control of costs and can see what the wage bill is week on week. 

RTI is a pain in the neck and who knows what unseen problems are still lurking. The way I look at it is that we are still service providers and if my clients want weekly payroll, then they can have weekly payroll - but they pay the going rate for the work. I am under no doubt whatsoever that it will increase costs - one way or another there is still additional work to do, no matter how organised you or your clients are. 

 

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My first weekly to monthly

Was in 1995 at the Metal Box plant where I was Finance Manager.  We had 400 or so weekly paid people on 8 hour shifts, and converted them into monthly paid people.  Note at the time the GMB were very aggressive, it was "failure to agree" on everything you asked of them.  The GMB said it would be a total flop.

After 3 months there had been a total of 3 complaints from staff.

Since setting up my practice in 2009, I estimate that I have converted between 70 and 100 staff from weekly to monthly pay covering about 20 clients from dance schools, restaurants, pubs etc.

Total complaints so far equals zero.  Total strikes threatened equals zero.

On balance I like to think I operate in the real world.  If you include conversions not previously mentioned, I have converted a total of well over 500 people from weekly to monthly pay with 3 complaints so far.  So just under a 1% complaint ratio.  Could be better, but not that bad I think.

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DIY payroll

I decided I wasn't going to pay the extra money to my accountant and downloaded HMRC's Basic PAYE RTI software. After a little background reading I setup both employees and entered the first months payments. No problems. Easy! How my accountant can justify an extra £240+VAT I don't know.

I'll show my wife how to do it and then I can forget about it and I've saved some valuable company funds in the process.

Actually, one issue I had with the rather limited HMRC software was working back from net to gross. We pay a fixed amount by standing order every month, so need to work that net amount back to the gross. Basic PAYE RTI software won't do this, but I found a great iPhone app that does it perfectly, matching the HMRC software calculations!

I now run my own payroll, produce quarterly VAT returns, self assessment returns and all that is left for my accountant to do is the annual accounts!

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Good for you.

milleniumaire wrote:

I decided I wasn't going to pay the extra money to my accountant and downloaded HMRC's Basic PAYE RTI software. After a little background reading I setup both employees and entered the first months payments. No problems. Easy! How my accountant can justify an extra £240+VAT I don't know.

I'll show my wife how to do it and then I can forget about it and I've saved some valuable company funds in the process.

Actually, one issue I had with the rather limited HMRC software was working back from net to gross. We pay a fixed amount by standing order every month, so need to work that net amount back to the gross. Basic PAYE RTI software won't do this, but I found a great iPhone app that does it perfectly, matching the HMRC software calculations!

I now run my own payroll, produce quarterly VAT returns, self assessment returns and all that is left for my accountant to do is the annual accounts!

I like to encourage my clients to do their own basic stuff if they're up to it (and some aren't).

But I wouldn't have thought your accountant would have had a problem justifying half an hour a month doing all that for you - including writing to you to let you know the net pay. 

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