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Real time information: 'iXBRL on steroids'

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26th Sep 2012
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The imminent arrival of real time information (RTI) for PAYE is causing a degree of unease and debate in the marketplace.

Described by IRIS Accountancy Solutions managing director Phill Robinson as “iXBRL on steroids”, RTI starts in earnest from next April. While HMRC says its RTI pilot scheme is going very well and is inviting more and more employers to join the scheme early, numerous commentators are raising the alarm about widespread ignorance and lack of preparation for the big migration.

RTI represents a bigger shift than iXBRL in terms of its overall impact on the UK economy, Robinson argued: “iXBRL was a change for the accountancy sector. RTI is a change for any [accountancy] firm looking after business clients, but also a change for 1.2m small and large business.”

Robinson estimated that 25% of small businesses do not run automated payroll systems. “On that basis will be hard for them to comply,” he warned.

Sage attracted a lot of attention too with a survey that showed revealed a majority of small and medium sized enterprises are not prepared for the introduction of RTI, and very few see the benefits that it will bring. Only 64% of the 1,000 businesses questioned were aware of RTI and just 10% thought that it would have a positive effect on their firm. In contrast, 43% of respondents thought the changes would increase rather than lessen their administrative burdens.

More recently, tax bodies went public with concerns that there was a risk that HMRC would use the new regime as an opportunity to increase its revenues from penalties for non-compliance. To allay these fears, they called on HMRC to defer levying penalties for a year to give RTI time to bed in.

It’s not for lack of information that awareness of RTI is so low - Treasury ministers, RTI programme executives, plus HMRC marketing managers and agent account managers all getting involved in getting the message out about the changes ahead.

At the recent Digita conference in Cirencester, an HMRC agent manager addressed the assembled accountants’ concerns about the penalty regime.

“Any system with the huge changes RTI brings about needs time to bed in. Our prime focus will be supporting agents and businesses to get it right rather than on penalties,” she said.

Drawing on both camps, this article will lay the groundwork for the final push to RTI and offer suggestions for those still struggling to come to terms with it as well as those in the know. In the weeks to come, AccountingWEB will follow up with general “how to” articles, advice for practitioners about the opportunities RTI could present for their firms, and for finance and payroll managers about how to prepare their systems and teams for the RTI regime.

To set the scene here is a selection of recent comments on the subject:

Progressing smoothly

Trouble ahead

David Gauke, Exchequer secretary to the Treasury: “The smoothness of the pilot has exceeded expectations. The feedback has been very positive from employers… it does reduce the requirements on business… We’re very much on track.”

Anthony Thomas, CIOT: “[RTI] will lead to substantial difficulties for many small employers. Penalties for those who fail to comply must be proportionate and the penalty framework simple.”

Mark Holden, HMRC’s RTI programme director: “We’ve had such a good response and the technology is working so well, we’re going to expand the pilot and give the opportunity to payroll bureaux to come on from November onwards.”

Neilson Watts, Sage: “Although we have seen increased awareness for RTI over the last year, it is still concerning that so many businesses are unaware of the changes and the implementation this will have to their firm.  RTI will impact businesses of all sizes and we urge that firms act now.”

Robin Metcalf, Richmond Towers Communications (RTI pilot scheme participant): “So far, so good. All we have to do is hit one extra button as part of the QuickBooks payroll process. From our perspective, it’s as easy as that.”

Alex Rowson, Qtac: “Setting up standard payrolls for 25 people paid monthly is no problem. But the oddities may not be covered, such as people who are paid in cash at the end of an evening. And there are likely to be problems towards the end of March for those who need to run continuous weekly payrolls. Currently there’s no way of doing that before April.”

What is this RTI?

1.If you are among the 36% who don't know about it, RTI is a new, automated HMRC process to collect payroll and tax details as wages and salary payments are made. It will do away with annual reconciliations and end-of-year forms such as P14s and P35s. All schemes/employers with fewer than 5,000 employees will start to submit RTI in April 2013; those with 5,000 employees or more will start to submit RTI on dates agreed with HMRC between June and Sept 2013 (unless an earlier date has been agreed).

2. Find out all you can, starting with HMRC’s RTI website, webinar and YouTube video. Consult whitepapers and advice produced by industry bodies such as the CIPP and software developers (see links below). AccountingWEB has a huge archive of relevant material too.

What do I do next?

1. Check if your software supplier is already accredited for RTI submissions.

2. Contact your supplier; if they are not on HMRC’s list, ask about their intentions and timetable and consider whether they will be able to meet your RTI requirements. If they are listed, ask about upgrade arrangements and whether they are offering extra training or support during the transition. Download and read any whitepapers or guides they have produced.

3. Start planning: liaise with your accountant/payroll provider and seek their advice on what you will need to do.

4. Set up an RTI action team that includes senior executives plus those responsible for payroll, IT and finance to ensure that all risks and angles are covered.

5. Communicate to employees about your RTI migration plans so they understand what will happen - in some cases you may need to collect their birth dates, full names and national insurance numbers to complete the data alignment process.

6. Consider joining the RTI pilot scheme. If you run a relatively standard PAYE scheme have everything in place before March 2013, you won’t have to submit 2012-13 end of year returns next April-May.

What needs to happen before we go live with RTI?

1. Data alignment - your records need to match HMRC’s database for the RTI system to work. Review your data against HMRC’s published data quality rules. If their data meets these criteria, small employers can do the data alignment as part of their first RTI payroll submission; larger firms (250+ employees) will have to carry out a separate alignment before their first submission.

2. Schedule implementation of RTI-compatible software; if your vendor is not able to give you a solid delivery date, consider alternatives (new payroll software, or perhaps outsource to a bureau?).

3. Install and test new software as far as you are able and await invitation from HMRC to join RTI.

RTI resources

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Replies (9)

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By ireallyshouldknowthisbut
01st Oct 2012 14:40

.

Does anyone know yet how to treat the large volume of small limited companies who have one or two directors and paid between the LEL and the Primary Threshold?

It would appear from the FAQ's they will still want monthly nil returns, although there seems to be an opt out to "advise them of a period of inactivity".  Can this be used to make the payroll dormant for 11 months and just put in a single annual return as now?  This of course no longer needs to be in March, but could be at another point.

I keep asking this question as in volume terms there must be more of these than "real" payrolls and filing several dozen 'nil' returns would be a big waste of time.

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By Andrew1946
01st Oct 2012 16:51

RTI - Small Payroll

I like the above IRSK, run the payroll for two/three Directors who are paid between the LEL and the Primary Threshold and have used the HMRC Basic PAYE Tools and Employers Database, which has been updated on an annual basis. The HMRC software is perfectly adequate for my purpose and provides the necessary completed forms for the annual payroll Returns and employee notification ie P45',s and P60's. Does the new reporting proceedure as outlined for RTI mean the HMRC Basic Tools software will become redundant at the end of the 2012/13 financial year,is it likely it willbe replaced by some other form of software by HMRC, or should I begin looking for some other provider of payroll software for these three emplyees /Directors

    

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By John Snowden
02nd Oct 2012 07:01

Basic PAYE Tools

will be RTI enabled, I understand.

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By Andrew1946
02nd Oct 2012 09:39

Basic PAYE TOOLS

JS, thanks this is most reassuring. Could you please let me know whether this is the official HMRC reponse and if so, when are they proposing release the software/upgrade, or whether you have gleened this information from some other source, and thus awaiting HMRC notification

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By John Snowden
02nd Oct 2012 10:02

Basic PAYE Tools

Andrew1946,

Among other places, see: http://www.hmrc.gov.uk/payerti/getting-started/payroll-system.htm for confirmation that Basic PAYE Tools are/will be enabled. I am sure I saw it also on a recent Agent Update from HMRC.

 

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By Andrew1946
02nd Oct 2012 10:59

Basic PAYE Tools

JS Thanks agaiin, for the benifit of those who likewise maybe following this topic, I contacted HMRC  - Basic Tools on line service , who confirmed that RTI wll be included in the Basis Tools PAYE upgrade of the software, however no date was given, otherthan it will be in time for the April 2013 payroll reporting deadline! - little regard applied by HMRC, to all the advice being given to emloyers to get their records in line before the big switch! 

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By puzzel
03rd Oct 2012 17:48

Are you sure about the dates?

I thought it would be the smaller business's that follow on and not be the first to apply RTI?

"All schemes/employers with fewer than 5,000 employees will start to submit RTI in April 2013; those with 5,000 employees or more will start to submit RTI on dates agreed with HMRC between June and Sept 2013"

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By Andrew1946
03rd Oct 2012 19:49

RTI small Payroll

Hi puzzel   Don't quite know who the query was aimed at. I unaware of the reporting deadlines for employers with a payroll in excess of 5000. The HMRC Basic Tools PAYE software I refer to is for those with a payroll of 9 or less employees, which I understand will be upgraded before the April 2013 payroll is run and  RTI  is submitted.

Your statement  in "All schemes/employers " seems to support my understanding, why larger employees have a longer or undefined period to comply, I can only guess is because of the sheer number of employees and  nodoubt the queries involved for alignment of the required information

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Replying to Martin B:
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By david5541
05th Oct 2012 13:12

rti paye

Andrew1946 wrote:

Hi puzzel   Don't quite know who the query was aimed at." I unaware of the reporting deadlines for employers with a payroll in excess of 5000."

the only office that will not be able to handle RTI will be the PAYE contact CENTRE-(it used to be different centres- for paye collection; p35 filing penalies and tax codes) now its always the same motley, disempowered, underskilled team who have to to answer the phones to us-who will really pay the price: we already get so many filing penalty errors on p35s.

 

My heart goes out to the staff wh have to answer the phone and have so little influence at HMRC

The HMRC Basic Tools PAYE software I refer to is for those with a payroll of 9 or less employees, which I understand will be upgraded before the April 2013 payroll is run and  RTI  is submitted.

Your statement  in "All schemes/employers " seems to support my understanding, why larger employees have a longer or undefined period to comply, I can only guess is because of the sheer number of employees and  nodoubt the queries involved for alignment of the required information

Thanks (0)