Focus on Real Time Information for PAYE

With less than two months to go to the roll-out of Real Time Information (RTI) reporting for PAYE, AccountingWEB is still getting bombarded with headlines like ‘RTI survey highlights need for support’ and ‘businesses still unaware of impending RTI changes’.

This is disappointing, but typical of the somewhat cavalier attitude the government takes to efiling initiatives and the tendency of UK businesses to ignore regulatory changes to the last minute.

But on AccountingWEB, we’ve been living with RTI for more than two years, and have been working with HMRC, professional bodies, software vendors and our members to try and prepare for the new regime, which IRIS APS chief executive Phill Robinson describes as “iXBRL on steroids”.

HMRC has also been working to communicate the RTI message – this week it sent letters to businesses advising them of the programme, and has upgraded its RTI pages to cater for their information needs.

Register with AccountingWEB for free to read the rest of the article, which includes:

  • Introduction to RTI
  • Pilot scheme progress
  • Software guidance
  • Trouble spots
  • General RTI resources

Continued...

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Comments
JAADAMS's picture

Here's another link...not sure under which heading it should go.

JAADAMS | | Permalink

Its a webinar of the Public Accounts committee that met on 28 Jan. There is quite a lot of commentary about RTI and how HMRC call centres are going to cope. The Chairman Margaret Hodge concluded that they wont (are we surprised?) Its worth the hour of listening. 

http://www.parliamentlive.tv/Main/Player.aspx?meetingId=12413&st=15:25:50 

and another link, Moneysoft RTI Guidance    1 thanks

Richard_Carey | | Permalink

We've got a number of videos and guides which show how our Payroll Manager software handles RTI.

http://www.moneysoft.co.uk/payroll-software/payroll-manager-rti.htm

Can we agree what to do please?

EOAKS | | Permalink

I've read all the text and listened to some webinars etc but I'm still not sure what to do...can someone please advise what we do with our directors salary/dividends?

Do we just submit a monthly return from Apl of £675 (or quarterly of £2025?) and then add the additional NI in the last month?

Will the new HMRC PAYE online system appreciate that there are such things as annual periods?

Or do we just allocate the salary amount to the directors loan account in Apl and sort it all out at the end of the year?

I am being asked these questions by clients and am not sure what to tell them.

Confused...

 

 

Euan MacLennan's picture

KISS    3 thanks

Euan MacLennan | | Permalink

I don't want to read reams and reams of bumph.  I have no problem with our existing monthly payrolls with several employees - the payroll software will handle RTI without any major effort on our part - but I do want the answer to two questions:

  1. How do we handle the one-man company directors being paid monthly just below the NI secondary threshold (£641 a month in 2013/14) who therefore pay no PAYE and for whom, until now, we have just had to prepare their end-of-year returns once a year?  Running payrolls every month in order to make a monthly RTI submission is overkill.  Running payrolls and making RTI submissions quarterly is still excessive.  Can we legally run an annual payroll in April and then make no further RTI submissions for the rest of the tax year?
  2. What software will enable us to do this?  I can see nothing in the Moneysoft information to suggest that it will be able to do this.

Free RTI guides, videos and links

CRichardson | | Permalink

We have dedicated a page to RTI on our website which includes free guides, videos and links to help you understand and overcome the introduction of RTI.  

http://www.pegasus.co.uk/content.asp?PagePath=Home/Software/Payroll%20%26%20HR/Real%20Time%20Information%20(RTI)

Our Payroll software has HMRC RTI and PAYE recognition for 2013/14 and we have just released our 2013 Payroll Upgrade which includes all the statutory changes required to complete the 2012/13 tax year end.

 

 

.    2 thanks

ireallyshouldkn... | | Permalink

@Euan its perfectly legal to have an annual accounting period for company directors. 

It is also legal to have the bonus added to the DL account and have the monthly payments as draw-downs from the loan, albeit less than ideal - I would prefer simply to run a monthly payroll if its paid monthly, or just not pay monthly as its a bit too cute to run it through the DL and you can see an inspector sniffing potential fines once we are into 2014/5 for not doing in monthly. 

It would be helpful to have a list of suppliers who have an annual accounting option as they are going to be in very high demand come April!

happy's picture

Engagement letters

happy | | Permalink

Still waiting for the ACCA to draw up some suggested additions to the letters of engagement for RTI, hoping it wont be too much longer. 

 

 

I hope this is in order

David Gordon FCCA | | Permalink

 So far as I understand the HMRC Sanskrit -

RTI tax and NI is payable on amounts paid. Not on amounts voted.

So complete the tax payable returns as and when the salary is paid.

issue your directors with a contract of employment:- see following notes, which says:

Any moneys paid to directors shall be deemed to be paid in the following order:Loans o/s, salary, dividend.

But that the directors may at any time by agreement with the company change the order for any particular payment.

 I do particularly include  one-man companies.

Please, do always remember that wages and employment legislation also regulate one man companies, and that directors are employees.

in order to avoid future hassle your director should be paid at least National Minimum rate for a reasonable number of hours. Otherwise your company risks being prosecuted for breaking employment legislation, and yes HMRC can be that sneaky.

 

 

:-

 

 

 

 

@ David, "in order to avoid

ireallyshouldkn... | | Permalink

@ David, "in order to avoid future hassle your director should be paid at least National Minimum rate for a reasonable number of hours." ,

This is a complete myth. No contract of employment, no requirement to pay NMW.

As with yourselves, we have

Matthew Thompson | | Permalink

As with yourselves, we have been living with and preparing for RTI for a number of years now. As long as businesses prepare their systems and processes, RTI shouldn't be as much of a problem as the mainstream media is trying to make it out to be.

http://www.iris.co.uk/rti 

IRIS offer a range of support options to help businesses prepare for RTI, from our free weekly webinars and whitepapers, to fully compliant payroll software and even a managed payroll services for those who feel they will not be ready. 

Is this being rolled out

AddsUP2Me | | Permalink

Is this being rolled out between April and Oct this year?

Is it for all employers? Or just those over a certain size?

From 6th April RTI will be    1 thanks

Matthew Thompson | | Permalink

From 6th April RTI will be compulsory for organisations operating PAYE scheme with 5,000 or fewer employees. Larger employers will need to be compliant later in the year.

silicondale's picture

Annual salary payment and HMRC software?

silicondale | | Permalink

As director of a microcompany, I don't run payroll software now, and object to the concept that I should have to buy it to operate RTI. However, as I understand it, HMRC will provide basic software for us to use.

Question - will this HMRC software allow for annual and/or irregular payment frequency? I'm not even interested in loan account and monthly payment - just a single annual salary payment into the director's personal bank account. I certainly would not want the hassle of remembering to file nil quarterly returns simply to stop HMRC from deleting our directors from their list of employees.

As for NMW, this is a complete red herring. In fact it's my wife who is the director who is being paid. I am a director but am not taking any salaryat all - though I am working more than full-time. Because I'm over state pension age and actually receiving pension, any salary would push me into tax, while my wife is not yet at state pension age and needs to accumulate a few more NI years in order to get anything like a full pension. Neither of us has any contract of employment with the company so as far as I can see this arrangement is perfectly above board.

JAADAMS's picture

Just listened to the new HMRC webinar

JAADAMS | | Permalink

... it was more of a list of 'where you can find things re RTI on HMRC's website'.

However a couple of questions were asked - one about whether RTI will have an impact on P11D's = no and the other on directors annual basis. 

The presenter confirmed that there is an annual basis for directors and that nothing has changed - such that you submit the return when the payment is placed (or infact before it is placed) into the directors loan account.

 

 

 .    1 thanks

ireallyshouldkn... | | Permalink

 

Richard Carey from Moneysoft has confirmed privately that there wont be an annual pay option with Payroll Manager. 

They will have a batch sending system which would work well for Euan's problem of monthly paid payroll, but wont be much good for annual or other irregular paid. Most of ours are paid once, annually, not every month. 

So other payroll sellers, so who has annual pay option? And can any import data from Moneysoft to keep my assistant happy (and my wage bill down)

Just spoken to 12pay, and they can do it, but its not on the demo, only on the full bureau system, and you still need to file 11 "blanks" even with an annual pay. 

 

RTI problems    1 thanks

Mike Nicholas | | Permalink

There are many things about RTI which are somewhat vague, let's say, and it is understandable that these generate queries and concern. However, I suggest that there are two issues of much greater concern that may and probably will cause big problems - and these seem to have escaped the attention of the accountancy profession, so far. Indeed it is known that problems have been identified in the pilot.

These two issues have been discussed at length on the CIPP group threads on LinkedIn. Visit http://www.linkedin.com/groupItem?view=&srchtype=discussedNews&gid=2070890&item=205788873&type=member&trk=eml-anet_dig-b_pd-ttl-cn&ut=020mv4DQK025E1. You will need to register and be accepted.

Space prevents full coverage here, so this is a brief (!) account.

HMRC's PAYE Service that processes the FPS and EPS returns has a serious database design defect. The defect has been publicly admitted by HMRC as long ago as October 2012. Essentially, duplicate employment (and pension recipient) records are being created in its database under each PAYE reference. If you want to know the causes of this read

http://www.hmrc.gov.uk/rti/emp-monthly-update-oct12.pdf.

It is likely that this duplication will not be eradicated/resolved until April 2014 when every payee must be allocated a unique employment indicator by the software in use.

The potential effects of this defect are to cause: (1) (re)allocation of personal allowances etc in tax codes for primary/secondary employments or pensions payments; (2) to double up the tax etc due under the PAYE / Accounts reference.

Which leads into the second issue... the inability of HMRC to establish the amount of tax etc due in any tax period under RTI. In addition to the doubling up, there are other problems including the timing of application of the entries in FPS and EPS returns. Note too that the values passed into HMRC's debt management system are derived from YTD values in the FPS/EPS returns, not the 'this period' values.

Given that it is the employer that HMRC will usually contact to demand unpaid tax etc, those practices providing payroll services may find their clients are somewhat and understandably annoyed that there has been a failure to comply with the PAYE etc requirements by their tax advisor. 

Note too that the PAYE penalties for failing to pay the due amounts of tax etc continue to apply from April 2013.

 

 

 

 

 

Verifying NI Numbers

bobhurn | | Permalink

I understand that there is an option to verify employee NI numbers en-bloc with HMRC, but I've been unable to find out how to do this - can anyone help with a link to the form?

Euan MacLennan's picture

Moneysoft & RTI

Euan MacLennan | | Permalink

ireallyshouldknowthisbut wrote:

Richard Carey from Moneysoft has confirmed privately that there wont be an annual pay option with Payroll Manager. 

They will have a batch sending system which would work well for Euan's problem of monthly paid payroll, but wont be much good for annual or other irregular paid. Most of ours are paid once, annually, not every month. 

As I have said on this other thread, Moneysoft's batch processing of RTI submissions for a list of company payrolls, without having to run any of them individually as payrolls, is an excellent solution for those of us who have a number of one-man company directors being paid monthly just under the NI threshold and who therefore do not need payslips.  Moneysoft's other relevant virtue is that you can set up the monthly payments on each payroll by entering the amount for April and then just clicking on a button to copy the payment to all the other months.  Having set it up at the start of the year and added the company to the list for batch RTI processing, you never need to open the company payroll again.  Most of my clients do indeed draw their salary every month, so this is the ideal solution, rather than fudging some sort of annual payment to the credit of the DLA with monthly draw downs.

I am rather surprised that anyone is actually paid a salary only once a year, let alone most of Ireallyshould's clients.

silicondale's picture

annual

silicondale | | Permalink

Euan - I am rather surprised that you are rather surprised. But then, I won't be using Moneysoft.

For microcompanies paying high dividends and low salaries, and wanting to minimise their paperwork, this can be the most sensible way to go - no need to set up any DLA (why leave the money in a company bank account at all when you can earn even slightly better interest in personal accounts?). Pay one annual 'salary', just below the NI threshold. In fact we don't even call it salary as this implies some sort of employment contract with the risk of NMW complications - in our books it is just a 'director's fee'. When using RTI, I guess the hours that we'll need to report will accordingly be zero. Why mess with monthly payments when you don't need to?  What we probably do need is an 'irregular' payment option as the single annual payment isn't always the same date or even the same month every year.

Similarly with our dividends by the way, we pay them when they are voted and don't leave the cash lying around in a company account. They can then go straight into a high-interest personal savings account until the money is needed.

If and when the company needs extra money, well we can then do that simply by loan from directors/shareholders or issue of shares, as appropriate at the time (in the 19 years I have been running this company we have not once needed a bank loan).

.

ireallyshouldkn... | | Permalink

@Euan, I like the flexibility of a single lump sum, so you can chose for example which year it goes into. For example if you have an April year end, you can take the lot in April or in May so giving choice over the final result and timing of the tax, with monthly paid there is no flexibility.  

Its just the way I like to do it, it would easier sometimes just to get them to pay it monthly.

For the way you do things Moneysoft will work really well, and their interface sounds well thought out. 

For the way I do things, it creates a risk in that how the payroll is run and how the client is run would not the same. I would want the payroll to reflect accurately what is happening in the business, rather than having a nasty choice of either asking out clients to change how they run their business so it fits into how the payroll system has been designed, or "fudging it" which opens an (albeit small) risk of HMRC taking an interest. 

Which is a PIA as I really like Moneysoft and don't fancy all the data re-keying on what is essentially a bit of pedantry on my part - we could just run blanks all year and stick it all in March and be done with it as there are no penalties in year one....so on one hand it doesn't really matter what we do 'in year' so long as it all gets filed and the right amount of tax is paid by the the end of it. That of course changes in 2014/15 which is why I want to get it fixed now. 

 

 

CA6855

David Heaton | | Permalink

@ bobhurn

See http://www.hmrc.gov.uk/manuals/nimmanual/NIM39210.htm, which explains what you do, and you can search for the form on the HMRC website.  It may be optimistic expecting a reply before RTI goes live if you have a lot of employers and employees, as lots of employers will be doing the same.  You can't submit an RTI NINO Verification Request until you've sent your first FPS, so the CA6855 is what you need at the moment.

Voting can be payment

David Heaton | | Permalink

@David Gordon: "RTI tax and NI is payable on amounts paid. Not on amounts voted"  Not necessarily ...

With directors, the legislation says payment can be at the earliest of five points, one of which is voting remuneration.  Even if the money is not drawn at the point when earnings are voted, payment can technically take place then.  RTI is only a reporting mechanism - the tax and NI are due by the 19th/22nd of the relevant month.   I've been talking to my accounting and audit colleagues to ensure they have grasped that, when a client signs off the accounts with a directors' bonus, they 'think RTI' immediately. 

Oddly, NI will be due when cash is paid out if the director overdraws a DLA in anticipation of voting future earnings to cover the overdrawn amount, so the voting of that later amount to put the DLA back in credit will not attract NI, because it has already been accounted for on the overdrawing.  Keeping track of overdrawn DLAs in real time could be a nightmare, so it's probably best to put the DLA well into credit and keep it there, or to minute a decision to allow a director to overdraw in anticipation of clearing the balance by voting a dividend (assuming there are enough distributable reserves and appropriate shareholdings), since the rule that deems the overdrawing to be earnings doesn't apply if the cash is not taken in anticipation of future earnings.

Paul Scholes's picture

HMRC Q&A session this evening

Paul Scholes | | Permalink

Anyone else see the tweets about registered annual PAYE schemes with employees < LEL avoiding need to report under RTI?

Re: LEL

matttaxnpayroll | | Permalink

If you only pay < LEL there is no need for a PAYE scheme, so no RTI reporting.  However, as soon as anyone is paid above LEL, new employee presents a P45 or someone ticks box C on a P46, then you do need a scheme and so do need to report everything under RTI.

One man bands

ShayaClearBooks | | Permalink

It may be worth putting in an annual salary on 6 April 2013 for the director's personal allowance, then crediting this to the director's loan account, and drawing it down throughout the year.

This could be supplemented with regular dividends and expense reclaims credited to the DLA throughout the year.

If, at a later date, it becomes apparent that there will be a S455 issue (for example) a top up monthly salary could also be credited to the loan account - our Open Payroll app will let you pay employees at different frequencies (both annually and monthly) throughout the year.

 

Annual Pay Periods

cmacrae | | Permalink

The overarching requirement under RTI is that an FPS is submitted on or before payment to the employee. Keytime Payroll has an annual pay period, but in most respects this really is irrelevant to RTI; we added it purely as an aid to ease periodic processing. We also have the ability to file an EPS for future periods of inactivity (spanning more than one month).

If anyone wants to discuss this further or understand how it works and how it will affect you, please feel free to contact us and we will be happy to advise.

 

Phone: 0161 484 3500    Email: info@keytime.co.uk

silicondale's picture

Misunderstanding?

silicondale | | Permalink

For one-man-bands who haven't needed payroll software in the past, it really is not an attractive proposition to install new software - even if it doesn't cost anything - and to learn how to use it for a single occasion each year! We just need HMRC to provide the option of using 'annual' or 'irregular' pay periods so we can do what we need on their own website - and not to assume that just because we haven't paid ourselves for 3 months we're no longer employed by our own companies. If they can do that, fine. Anything else is additional redundant red tape.