Practitioners: Act now to benefit from RTI

The arrival of real time information (RTI) for PAYE is a classic opportunity masquerading as a problem for practitioners, according to payroll and practice experts.

At the recent IRIS World roadshows, for example, CEO Phill Robinson has been telling accountants about the potential prospects: “Our research shows that 23% of microbusinesses don’t have any payroll software at all. They will need software or a bureau to submit payroll information to HMRC. There’s an opportunity to offer a service to those companies.”

The controversies and nuts-and-bolts explanations about RTI have been tackled elsewhere on AccountingWEB. This article focuses on practice development and how RTI can open the door for a closer relationship with your clients.

Payroll not for me

For many practitioners, payroll is too mundane and troublesome to fit with their more specialist/value-added strategies.

But if the task is that mundane, why are you leaving it to your client to use labour-intensive and potentially non-compliant methods? If you are genuinely interested in making them more efficient and profitable, you could surely encourage them to could use basic commercial payroll software, not only to increase their productivity, but also to reduce the likelihood of visits from HMRC inspectors.

In a recent article on AccountingWEB, Sage’s Andrew Downey encouraged accountants and payroll bureau operators to familiarise themselves with RTI and the processes involved.

“You may also want to take this opportunity to educate your clients around the provision of timely and accurate data, as these are both integral to ensuring that RTI implementation is a success, and ensuring that your employees continue to be paid accurately and on time,” he wrote.

Intuit’s Diana Flier commented in the company’s RTI whitepaper for accountants that the ability to set up an employee for payment through a PAYE scheme with little more than a bank account, tax code and name lies at the source of the mountain of dubious data that resides in HMRC’s National Insurance and Payroll Service (NPS) computers.

With the advent of RTI, “All of this made-up data needs to be corrected,” said Flier.

“Going forward, putting in good procedures is not a bad idea. Asking for passports when interviewing people not only allows you to verify their identity and date of birth, but also their entitlement to work in UK.”

The bureau opportunity

PAYE is already a burden for business. Forced computerisation, collating new kinds of information and aligning their data with HMRC may be the final straw for some organisations. Payroll bureau services - many of them operated by accountancy firms - are already beginning to experience a surge of interest.

Some practices are already using RTI as a massive business development exercise. If they can bring new companies into their orbit through payroll, they will look to build on that relationship with other offerings.

Software options

But regulatory change inevitably means extra cost and disruption for developers, accountants and clients. Good planning is the best way to minimise the potential pain, but even with a plan in place, resources will be needed to deliver it.

Perhaps the most worrying aspect of the RTI run-in is the readiness of the payroll software industry itself. With fingers burned from previous HMRC software transitions, many of them held back their RTI development plans until they were certain of the technical specifications they would have to meet. Only a handful signed up for the pilot scheme that started in April this year, and just 15 are currently listed on HMRC’s directory of RTI-compliant payroll programs.

12 Pay’s Tom McClelland explained that there are good reasons why many reputable payroll software developers are not on the list yet. RTI is still in its pilot phase until April 2013 and the software specification that will apply from April 2013, when the bulk of companies are brought into the system is different from the pilot specification. So developers cannot get HMRC recognition yet for the software specification that 99% of employers will need to use when they come on stream with RTI. “Hands up everyone who thinks this is a good idea,” McClelland added.

Stay tuned to AccountingWEB in the weeks and months ahead for further information on RTI software suppliers, potential filing troublespots and news announcements.

Continued...

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Comments
AnnaKournikovasKnickers's picture

Setting up an employee for payment through a PAYE

AnnaKournikovas... | | Permalink

As an IFA,  I am constantly shocked at the number of individual 'back bedroom holistic healers' who should not only be running a PAYE scheme but who shouldn't be incorporated in the first place! Up shoot their hands at Chamber of Commerce, Business Link, etc etc seminars and nobody says "why aren't you a sole trader or a husband and wife partnership"?.

If accountants were regulated by the FSA, as we are, they would be banged up for not 'Treating Customers Fairly'.