RTI: Prepare your payroll team now

Robert Lovell explains the implications of operating PAYE in real time and offers up some practical advice for small businesses and their finance departments.

By 6 April 2013 almost all employers and pension providers will be reporting their payroll information to HMRC on or before every payday. By October 2013 it will be mandatory for all employers.

With just a few months left to prepare for the Real Time Information (RTI) initiative, AccountingWEB has pulled together a guide on how best to prepare your finance team.

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  • Data quality
  • Communicating with staff and changing procedures
  • Software

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Comments

Clarify

neiltonks | | Permalink

The statement that:

"If an employee takes unpaid leave you need to set an irregular payment indicator when you make their final payment for that period or HMRC will assume that they've left your employment."

is confusing two separate aspects of RTI.

Under RTI, if HMRC don't receive any information at all about an employee for three months they'll assume the employment is ended. The irregular payment indicator prevents this, so it needs to be set for employees who are likely to not be paid for periods of three months or more (e.g. casuals), and should also be used for anyone taking unpaid leave of at least three months. Note this may include women on maternity leave if they're taking the full 52 weeks off, since SMP ends after 39 weeks.

There's a separate flag to indicate that an employee's pay in an individual pay period has been reduced due to them taking unpaid leave during that pay period. This is to be used in the calculation of Universal Credit. It's a new item from April 2013 (i.e. it's not part of RTI in the current pilot phase).

 

 

Mandatory for new schemes?

ahalgryn | | Permalink

I've heard at one or two seminars that new PAYE schemes registered from 1 November '12 will be automatically enrolled into RTI and that this is mandatory. Although I believe a letter can be sent to HMRC to opt out until the April '13 compulsory date. HMRC themselves don't know the answer (as usual).

Can anyone shed any light?

Thanks.

accountant's comment

npreynolds | | Permalink

I must first of all declare my position. I am an accountant in practise,. My firm runs payrolls (as well as providng added value services). We use Sage, We have the data we need to cope with RTI.

What worries me is that when it comes to tax planning we will no longer have the option to back date bonuses. RTI means we will have to be smarter about tax planning. We will need to know the leve of  profits as the accounting year end approaches and deal with dividends and directors' bonuses "live" as it were. We will need to give advice on bonuses prior to the accounting year end and pay the paye in the next month.

So as well as pressure on the payroll record keeping here is a pressure on the overall accounting system

 

 

 

lionofludesch's picture

Backdate bonuses ? Gosh.

lionofludesch | | Permalink

Backdate bonuses ?

Gosh.

New PAYE schemes and RTI

confused.com | | Permalink

This could well be true - it was mentioned at an HMRC seminar last month, although the HMRC speakers clearly didn't know what they were talking about. The rules are changing every 5 minutes in any case, so nobody really knows where they are with things!

Online PAYE registrations updated

ahalgryn | | Permalink

I noticed on the online registration forms for PAYE HMRC have added in a tickbox to opt out of RTI for now. At least we know where they stand!

Andrew Halgryn

www.boox.co.uk

Confused.com

brucier | | Permalink

Our Practice is ready for RTI however I have been trying to get a straight answer to the following scenario. I cannot get through to the HMRC Help-desk so I was wondering whether any persons here would know the answer.

When we move into 13_14 we will have a few PAYE Schemes which we look after, on which there will be no Employees thereon. The Company is still live however the Director/Employee has chosen not cease PAYE Income due to several reasons. It is envisaged that he will start again in 13_14. Do we therefore have to have the PAYE Scheme set up on our Software and then submit an FPS [Under 250 employees] in Month One ticking the box to say that there are no payments due that month, followed by a like FPS each month thereafter. That is scenario 1.

 

Scenario 2 is a PAYE Scheme that it set up for a Company to operate a CIS Scheme. there are no employees on the payroll nor will there ever be so its purely for CIS.

I have trawled through the information on here and apologies if I have missed the answer but any help would be good.

Brucie

 

 

Divorced from reality

Ian McTernan CTA | | Permalink

If you want to know how far divorced from reality the people who designed this system and were on our representative committees were, this sums it up:

Payroll and finance managers should make sure the information they hold on employees is accurate and where possible, check the information against an official document such as an HMRC document, passport or birth certificate.

In the real world many smaller companies don't have the luxury of a dedicated payroll or finance manager nor do they have the time to faff about checking documents to see whether an employee's name is not spelt exactly how HMRC have it on their records.

It's going to be fun...