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Fee after RTI payroll services

For payroll services, normally we charge £250 (fixed) plus £4-£5 per employee per month for payroll services to a business. So a business with 4-5 employees pays around £450/500 per annum for payroll services (Payslips+P45+P60+P35 etc). Now after the Real Time Information implications from April 2013, we would have to submit reports to HMRC nearly 12 or in some cases (weekly pay) 52 times a year . What should be the level of fee for providing payroll services after April 2013? Any comments please.

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By NH
03rd Dec 2012 07:32

why charge more

Why would you charge any more than you do at present.  So you have to click an extra button each month?

Sounds like an excuse to charge a bit more for virtually no extra work

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03rd Dec 2012 09:50

@doctorwho - I must be missing out

Payrolls for me (Moneysoft) take 5 mins per month where there are 2/3 employees

Client emails me, I pdf payslips in Moneysoft and email to client.

Over the course of the year that, plus P35 etc take me an hour (maybe an hour and a half)

So I charge £120 (or £10/mth) all in

If you charge £250+£x per employee then maybe I need to review my charges!

 

 

 

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03rd Dec 2012 09:52

oh sorry, one more thing...

agree with NH, RTI for me in most cases will be like xbrl, no difference whatsoever.

VT (who i use for accounts) had a button you press to generate xbrl file so all the hulabaloo took me approx 30 seconds per client so I didn't add any extra

I expect Moneysoft will have "sorted" the RTI issue by the time it comes around and so payroll RTI will be just one "click" in much the same way.

 

 

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03rd Dec 2012 10:07

Its the set-up that takes time

Agree with the above in that on an ongoing basis it will add a couple of minutes.  However, why not charge extra if you can, their is certainly a lot of press on this at present.

Having 3 clients on the pilot, my experience is that the time consuming task is getting the basic information checked and up to date - proper names, addresses, NI numbers in some cases, contracted hours etc etc.  i would certainly say it is justified to charge a set-up fee.

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03rd Dec 2012 10:38

Thanks!

zeofiles wrote:

Agree with the above in that on an ongoing basis it will add a couple of minutes.  However, why not charge extra if you can, their is certainly a lot of press on this at present.

Having 3 clients on the pilot, my experience is that the time consuming task is getting the basic information checked and up to date - proper names, addresses, NI numbers in some cases, contracted hours etc etc.  i would certainly say it is justified to charge a set-up fee.

 

This will be my February extra fee generation target then!!

 

 

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By 0098087
03rd Dec 2012 10:44

Jeez..wish we could charge those fees. We get moaned out and ours our a lot lot less!

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By marks
03rd Dec 2012 11:12

my fees

I outsource my fees to a former work colleague who has her own payroll bureau business.

I charge my client's what she charges me so I dont make anything from payroll work but do it just so I am offering the complete package.

She charges

£2.50 per month payslip

£2 per fortnightly payslip

£1.50 per weekly payslip

£50 fixed yearly fee.

So if there was one monthly employee the yearly fee would be £80 (12 x £2.50 + £50) and thereafter each monthly employee would add £30 to the yearly fee.

If I have a client who has 4 employees the yearly charge would be £170 (4x12x£2.50 + £50) and if 5 employees would be another £30 ie £200.  So would say you are doing alright getting £450 or £500 at the moment.

Regards

Mark

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03rd Dec 2012 13:24

RTI - compliance costs

I have been on the look out for comments from anyone who has practical experience of RTI.  Judging from the above it seems (a) there will be some extra time in "converting" clients to RTI, and (b) there will be little or no extra time spent (or saved) on the monthly work. 

No one knows for sure about how much time will be needed at the payroll year end - I am talking about EC "micro businesses" - whilst in theory there will be a time saving I am sceptical as most of my time is spent reconciling what should have been paid to what has actually been paid. 

However, whilst RTI is required for each time the payroll is run I have not seen anything from HMRC which clarifies how this will impact on those businesses who file the PAYE/NIC returns and payments quarterly.  As anyone read or know of anything from HMRC on this aspect of RTI ?

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05th Dec 2012 16:16

BACS

Philip Nickson wrote:

I have been on the look out for comments from anyone who has practical experience of RTI.  Judging from the above it seems (a) there will be some extra time in "converting" clients to RTI, and (b) there will be little or no extra time spent (or saved) on the monthly work. 

 

We have a payroll bureau here. I have just been quoted an additional £150 annual fee for the BACs software update and they want to charge for installation and training which could take one to two days at a cost of £750 per day.  Across the 30 payrolls that we use BACs for this is obviously an additional cost of £25-£50 per client which we cannot avoid.

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Is the BACS training necessary?

Paula Sparrow wrote:

Philip Nickson wrote:

I have been on the look out for comments from anyone who has practical experience of RTI.  Judging from the above it seems (a) there will be some extra time in "converting" clients to RTI, and (b) there will be little or no extra time spent (or saved) on the monthly work. 

 

We have a payroll bureau here. I have just been quoted an additional £150 annual fee for the BACs software update and they want to charge for installation and training which could take one to two days at a cost of £750 per day.  Across the 30 payrolls that we use BACs for this is obviously an additional cost of £25-£50 per client which we cannot avoid.

 

I heard of this at another bureau (a very large one, as it happens so the incidental cost was not big to them), but the training was basically unnecessary, since virtually nothing about the software had changed and it was easy to use anyway. You might want to query whether you really need the training. (and indeed if the installation can be done by you or using a product like Join.Me.). Otherwise that is a nice little earner for them.

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06th Dec 2012 14:06

Who knows?

I imagine that there is something different that needs to be done in relation to the new #number that is generated and causes the need for whole new software.  Not what I need in the run up to January.

I'm also not sure how clients who make their own BACs payments are affected if we run their payrolls and just give them the figures.

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BACS, internet banking, and hashtags

Paula Sparrow wrote:

I imagine that there is something different that needs to be done in relation to the new #number that is generated and causes the need for whole new software.  Not what I need in the run up to January.

There is no need for the hashtag requirements to change anything about the operation of the BACS software. It ought to be completely invisible to users, provided that your payroll software is inserting the hashtag in the correct place in the file that you import into the BACS software. In the case I referred to above everything worked first time and the BACS software operation was unchanged. So the fee for training was completely wasted.

Paula Sparrow wrote:

I'm also not sure how clients who make their own BACs payments are affected if we run their payrolls and just give them the figures.

They won't be able to work that way any more if they are actually using Direct BACS or a BACS Bureau, because they won't have the RTI hashtags (unless they do something crazy and manual, like getting a list of the hashtags from you and manually keying them into their BACS file too, which sounds like something that is 99% certain to generate errors). If they're using internet banking then no issue arises because internet banking products haven't been updated to use the hashtags, and HMRC accepts that. If that is the case you must make sure that you're not generating hashtags in your payroll software for those clients, or HMRC will start seeing lots of unmatched payments.

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By djn24
04th Dec 2012 11:24

We too are looking at a new fee structure for the RTI scheme. I would say that our fees are on par with doctorwho.

We don't change different fees for monthly or weekly payslips which should have changed a long time ago.  We will be taking this opportunity to address this and make our fees levels more transparent and hopefully a little higher:-)

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By hje
04th Dec 2012 11:41

With regard to the original post, we are looking closely at our fee structure too.

For those who say 'why charge more?' - consider the implications of your software provider increasing their annual fee by 25% due to them passing on the direct costs of RTI programming and development costs. For some bureaux, we're already talking 3 or 4 thousand pounds a year before a single payroll is charged at £30 per month....doesn't take a genius to recognise that either the business model is flawed or we reconsider our fees.

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04th Dec 2012 11:42

Wow

 

I don't charge enough either, we use Moneysoft like Ding Dong and it is a 10 minute job for me.  To be honest I just add it on to the year end fee!

Maybe I should review my fee structure...........

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04th Dec 2012 11:45

The extra time will be spent on clients who pay themselves £624 per month with no payslips at present.  These will need reporting monthly and we are planning to charge £10 per month extra now to cover the time spent logging in and pressing the button to send the info

 

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04th Dec 2012 11:49

year end fees

We charge a fee for processing the year end P35 etc, so we're expecting that any extra costs for doing RTI will replace the fee for the P35s.  The end result is that the client doesn't pay any more, but we'll have to wait and see how this affects our costings.

If it works out to be as simple as HMRc tell us it will be (!) then we might even gain a little, but I won't hold my breath

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By djn24
04th Dec 2012 11:51

Our payroll software comes in at about £800 a year so charging £120 for one payroll scheme wouldn't make financial sense by the time other costs are factored in.

Seems to me that a minimum fee per month plus a charge per payslip is the best way to go.

I wonder what the penalties will be like if anything goes wrong under RTI.  If we were only charging £120 we would make a loss if there were any mistakes made so may as well not do it.

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04th Dec 2012 11:58

I fear that RTI will have most effect on the smaller clients

We deal with the payroll for about 200 clients.

Some of these (usually larger clients) have one or more employees where we calculate wages, provide payslips etc for which we use Moneysoft payroll. The trial runs we have had with these clients in recent weeks suggest that we will only have to run the payroll as normal but then literally click one more button to submit the information to HMRC. I cannot, therefore, see that RTI will cause much, if any, extra work for these clients.

Many of these payrolls are, however, small companies often where the only employee is the director or possibly the director plus one other (spouse or child for example).

At the moment all we do for these clients is advise them at the beginning of the year what they need to be paying themselves (at the moment usually £144 pw or £624 pm). There is no tax or NI and the client doesn't want/need payslips. All we do, therefore, is submit a nil PAYE payment  once every three months and a year-end P35 with P14/P60's etc for which we usually use HMRC's software.

This is where I can see RTI causing more work since we will be going from one return each year to potentially 52 (although I will be suggesting that our clients ought to be paying themselves monthly rather than weekly). Again once the information is on Moneysoft, submitting the information shouldn't be a problem. I'm sure that the time taken to submit the information for something like 150 clients is, however, going to take longer doing this each month rather than once a year.

As far as what we are going to charge for this - at the moment we haven't decided. For these one-person companies last year we charged £55 for submitting the P35. I suspect this is going to increase to something like £10 per month when RTI is introduced. It will, therefore, be the smaller clients that will cause most of the extra work for us.

I'm going on a HMRC course about RTI tomorrow so I may revise my view afterwards.

 

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07th Dec 2012 08:44

RTI - compliance costs

Was the RTI course useful ? 

The general concensus seems to be that for payrolls where there were "conventional" staff RTI would not give rise to any real change.  The biggest operational change will be for director/shareholder businesses where the only filing currently is an annual P35/P14/P60 - I wonder if RTI will cope with directors being paid a full year's salary in March ?

The other major issue is penalties.  Whilst HMRC will not change anything in 2013/14 I suggest it would be wise to understand where transgressions occur in that year in order to anticipate problems when the penalty regime does bite.  I can see one major issue:  If we genuinely do need to secure a client's positive confirmation before filing under RTI - that would be a guranteed recipe for about 12 penalties pa !

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HMRC gives no guidance on client approval

Philip Nickson wrote:

...

I can see one major issue:  If we genuinely do need to secure a client's positive confirmation before filing under RTI - that would be a guranteed recipe for about 12 penalties pa !

Or 52 penalties if a weekly payroll is operated, or 64 penalties if some employees are paid weekly and some monthly... you get my drift.

I queried HMRC directly on whether or not agents/bureaus/practices should gain explicit approval for each RTI submission, and HMRC refuses to comment or give any guidance on the matter. They state it isn't their place to do so.

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By djn24
07th Dec 2012 10:40

There's no way that we will wait to have approval for every payroll run before submitting them as this would be practicallly impossible.

 

It will have to be covered in our letter of engagement and have something along the lines of......Weekly payroll will be run on a Wednesday, any changes need to be reported to 2 days before the payroll run.  Once the payroll has been run we will assume that no changes need to be made and this information will be submitted to HMRC immediately to avoid any penalties for late submission.

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04th Dec 2012 12:07

Sadly as I pointed out elsewhere

1  The penalties for getting it wrong may fall on accountants so you will need new terms of engagement.

2  As with the P35 you are supposed to get each submission agreed by your client before it is made.  Stating "If I dont hear from you by....." is not acceptable according to advice we have received.  Thats an extra 52 or 12 communications.

3 The sending of sensitive data including that in payslips is contrary to the terms of the Data Protection Act (and the soon to be enacted EU directive).

I am still not sure what we will do - may even outsource to a payroll bureau.  Fees I think because of the above will have to rise.

 

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04th Dec 2012 12:43

Risk is the issue, not time

Surely the issue is notthe xtra time taken under RTI (which may be minimal) but the additional risks.  When the penalties start to hit who is going to get the blame?  With the best will in the world there will be some mistakes and when those mistakes are made by the payroll bureau then the client will expect them to pick up the penalty.  Fees will have to rise to cover this additional risk/cost.  Sadly, as we do not know what the penalties will be or how they will operate it is too early to be definitive on the extra fees.

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Penalties have been announced, in fact

For the year to April 2014 there are no new penalties for RTI submissions.

The penalty regime for the final FPS/EPS submission of the PAYE year (with assorted declarations like the P35) will be very similar to the current P35/P14 regime.

The will be no new penalties for late or innaccurate FPS/EPS submissions in-year. Where an inspection uncovers that errors or ommissions have led to underpayment then the existing penalty regime will continue, with the existing reliefs for (a) voluntary disclosure and (b) honest and competent attempts to comply.

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04th Dec 2012 13:00

Penalties have been announced for the transitional year but that is not going to be the problem period!

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04th Dec 2012 16:09

OPPORTUNITY

I currently have several small clients for whome I do weekly payroll.

I wrote to them all informing them that due to RTI I would like them to convert to monthly payroll. If they did my fee would remain the same.

If they wished me to continue doing weekly payroll my fee would need to significantly increase for the responsibility of having to do 52 returns to HMRC instead of one.

One client still to reply all others will go to monthly from April.

So I will get same fees for less work, and most importantly fewer deadlines.

 

 

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10th Dec 2012 08:12

djn24

I note what you say and the end result will be ok until your client falls foul and receives a penalty.  At that point you may be coughing up the fee to retain them.

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By djn24
10th Dec 2012 09:00

If there is a clear understanding in place before RTI kicks in then the client will know exactly what is needed.  If for whatever reason the client messes up then we will not pay for any penalties.  If the error is on our part then of course we would suffer the penalty.

A letter of engagment and a follow up letter as a reminder should cover it.  Asking for approval for every client, every payroll run is just crazy. If we run 100 payrolls weekly how on earth would we get confirmation on all these in time?  In practice are you saying that if a client doesn't approve the payroll in time then you would not submit it?  If you would it kind of defeats the object and if you wouldn't then I'm sure the client will be very unhappy. There has to be a practical way around this surley?

 

 

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10th Dec 2012 09:39

djn24

"In practice are you saying that if a client doesn't approve the payroll in time then you would not submit it?"

As we have been advised - yes.  The problem is that you are only the agent of the employer and therefore can not make decisions for the employer. 

I feel that we are all being left with an HMRC problem that will backfire.

 

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