RTI case study: ICAS pilot scheme
The introduction of Real Time Information (RTI) for operating PAYE will mean that all employers, apart from some of those with more than 5,000 employees, will join by default in April 2013.
Over the last year many businesses joined HMRC’s pilot RTI scheme to ensure they were as best prepared as possible ahead of the default date.
AccountingWEB caught up with Shannon Malkiewicz, payroll officer at the Institute of Chartered Accountants of Scotland (ICAS) for some insight into how they dealt with the introduction of RTI.
ICAS went live on the RTI pilot in November 2012 and according to Malkiewicz the experience was “all very positive; I had expected more teething issues for such a new process.”
Malkiewicz explained ICAS’ involvement in the scheme: “We were lucky our software developers have been on the leading edge of RTI and the RTI pilot. They have access to dedicated HMRC specialists that they contact themselves, along with any contacts that their clients have, so we were well-supported by our software developers on the payroll side of things.”
ICAS used commercial software provider Software For People and used its World Service Payroll system. They were the first payroll provider to go live on RTI in April 2012 and also completed the very first RTI submission.
“We had experts on our side and they were very well organised,” said Malkiewicz. “They released a year-end update with all the RTI release notes a month prior to the end of ‘11/’12, which gave us time to absorb everything and ensure that our existing processes accommodated the RTI personal data compliance.”
Malkiewicz said that on the whole they already had it covered with a main payroll and a casual payroll, but the casual processes needed to be aligned to ICAS’ main payroll processes, which required some extra work.
“We had to do a wee bit to align the processes. Payroll and HR worked closely to ensure the quality and quantity of information required was obtained for all future starts. Once we'd ensured all current data was fine we made sure that, going forward, new people going on to the payroll were RTI compliant before payrolls were processed,” she said.
“Even though we knew at that point that we weren't due to join the pilot until later in 2012, we wanted to make sure that, once we had done our year-end process for both payrolls in April, we had a RTI-compliant base line.”
She added that all they had to ensure from that point on was that anybody new going onto the payroll or anybody changing details on payroll were compliant with the RTI requirements.
The ICAS HR team were integral to a data cleansing that was carried out, confirming the information held was current and safeguarding its continued integrity. The different payrolls are held on separate databases within World Service, so separate exercises were required.
One of the biggest tripping-up stages for a lot of employers is making sure to use the full name of an employee from either their birth certificate or passport for RTI.
“Because Betty who pushes the cart around the office might actually be called Elizabeth, but be known to all as Betty,” she explained.
Most common problems being reported, include:
·unexpected IT issues (HMRC internal)
·software (external) hasn't been adequately programmed
·employers haven't understood the procedures
·reconciliation of the Employer Payment Summary (EPS) with the actual remittances made
In terms of the communication strategy, Malkiewicz used their internal intranet site to post a request asking all staff to double-check their personal data on the existing online HR self-service window.
“We had several rounds of communications with staff aimed at ensuring everything was as accurate as it possibly could be, but going live in November meant we had to do a partial year-end process on both payrolls, because obviously we had been paying people from April until October, so HMRC didn't have that information.”
That exercise produced the EAS (Employee Alignment Submission) file, which is essential on migration to RTI.
ICAS also put additional messages for staff on their online HR self-service window, taking employees to the link for HMRC updates, so that they were aware that if they were changing information with ICAS they had to change it with HMRC too so that the records would align, and to assist with keeping the data “clean”.
“When we sent out the payslips in October and posted onto the intranet the usual communication that payslips were available, we re-iterated the message: ‘Can you please check that your personal data is correct’.
“There was a bit of work involved in making sure people understood the importance of the changes and took the necessary steps. So far we seem to have managed that well, but doubtless time will tell,” she added.
In terms of challenges, Malkiewicz said they encountered a couple of stumbling blocks, but that in retrospect those were quite minor, peripheral problems.
The first was a timing issue: “We had letters from HMRC confirming that both payrolls were going to go live on RTI in November. However when we transmitted our EAS file online, one of the part year-end files wasn't accepted because they weren't expecting a file from us at that point.”
She explained that, luckily, because Software for People had their own dedicated HMRC contacts, they managed to resolve the problem in 24 hours.
“It was one of those times when you push the button and expect everything to go fine, and then have a slight panic trying to get it fixed,” she said.
The next challenge was a need to run BACS test submissions towards the end of the process - although the BACS software providers had confirmed they were RTI compliant, submission files had to be tested and returned with no errors.
Luckily their BACS software providers were very helpful, had been through similar situations with other clients and any problems were relatively straightforward to sort out.
The next phase
Asked whether there was an element of hand-holding during the pilot phase, Malkiewicz said it was possible that smaller employers, or those without the same resources and experienced payroll and BACS providers, could suffer once RTI is mandatory.
“It will be a lot more difficult if they have more variety of contracts and terms and conditions on one payroll, which could make the alignment of RTI compliant information tricky.”
She added: “From a small business point of view, it's quite a lot of work to do a partial year-end process to migrate to RTI and they might see that as unduly cumbersome but actually, preparation in advance is crucial; taking steps now is the way - take the time to do it properly.”
Offering one single piece of advice, Malkiewicz said the key step was to get HR and payroll data cleansed. “That's your biggest problem. If you don't have your data in the right format or if you have incorrect or incomplete data, that's going to cause you a lot of difficulties.
“It's not only going to cause you difficulty when you do your first submission, it's going to cause you further difficulties once you've gone live because HMRC will receive your RTI upload and then they will question everything that doesn't tie in with their records. The more errors that are in your data, the more questions you're going to have and that's going to be time intensive.”