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RTI on or before
HMRC seems to have forgotten that each tax month begins on the 6th and ends on the following 5th.
Lost count of the number of RTINOTs that indicated late submission down to the fact that 7 months have 31 days, four 30 and Feb 28 or 29 if a Leap Year!
Shocking!!!!!
Surely whoever decided that a sample-size of 50 was in any way useful should be fired?
As I understand it, the idea behind RTI was so that benefits could be calculated based on claimants' actual earnings - great idea in principle. Since benefits are generally paid 4-weekly as far as I am aware, there will always be a mismatch between the pay-period and the benefit period and payments aren't calculated and transferred instantaneously anyway, so there will always be a need for some recalculations of benefits paid. Pragmatically therefore, would it really hurt to make the RTI filing deadline say one week after the end of each payroll tax month, i.e. on or before 12th of the calendar month, or better still the 19th.
Principle vs implementation
It is good to see that David Gauke has accepted a number of the OTS proposals around RTI. The Treasury and HMRC need to recognise the huge burden that RTI imposes on small businesses, which generally do not have a payroll department and rely on staff who deal with payroll just once a month and, consequently, have limited time (and knowledge) to deal with the administration around RTI. Most of us recognise the value inherent in the principle of (near) real-time reporting, but its implementation should not be at the extent of imposing unreasonable burdens on the small businesses that support our economy.
As David Gauke has agreed to review 'on or before’ reporting, whether it is necessary and the scope for extending easements for small employers, I would like to suggest that delaying the deadline for reporting to the 19th of the following month (i.e. the same date as the offline payment deadline) would solve many of the problems encountered by small businesses and their advisers. In particular, this would solve the problem whereby the employer informs the payroll administrator (whether internal or external) of a last-minute change to payments made (or doesn't remember to tell them until the next month, or until the bank has been reconciled and the discrepancy spotted).
Further, the ability for the employer to opt into an automatic direct debit scheme (whereby HMRC can take payments by direct debit of the tax/NIC due as filed on the FPS) would significantly reduce the problems of late payment of PAYE. By making this optional, any employer with non-simple payroll (eg CIS, SSP adjustments to PAYE due) could choose to continue making manual payments (as at present), but the hundreds of thousands of small employers who have simple payroll reporting could pay their PAYE every month on time and as easily as they pay their VAT (a scheme that has presumably cut late payments of VAT considerably). If the FPS is filed by 19th, then DD payment can be taken by 22nd (the current payment deadline for online payments), in the same way that a VAT return filed by 7th can be paid by DD on 10th.
Ah yes
but this is payroll and PAYE. As mentioned many times on Aweb the PAYE system is just not up to speed and if it went wrong there would be hell to pay at HMRC, not withstanding there is now with the staff cuts.
A PERFECT EXAMPLE THAT "ONE SIZE DOES NOT FIT ALL"
Agreed charliecarne.
RTI in principle is an efficient tool when well thought out and well administered.
Substantial business with accounts departments should have no issue, but too many small businesses, certainly ones I deal with, are struggling to manage, that's with my help!
Common sense should prevail and align submission deadlines with the dates for CIS300's, which will provide a big enough window to deal with.
Furthermore, I have encountered problems in running BPT and Sage payroll which HMRC have no answer for, other than starting over again.
RTI SUBMISSION ON OR BEFORE
When hourly paid employees are paid for their total hours up to the last day of each month, it is nigh impossible to obtain their time sheets from the supervisor, enter the figures and run the payroll, add overtime & holidays etc and submit to HMRC, especially if the employees work until 1700 hrs, and the payroll manager happens to be away, on holiday, or otherwise unable timewise to complete all this without working through to 23.59 that day!
Late time sheets and sick payroll staff
When hourly paid employees are paid for their total hours up to the last day of each month, it is nigh impossible to obtain their time sheets from the supervisor, enter the figures and run the payroll, add overtime & holidays etc and submit to HMRC, especially if the employees work until 1700 hrs, and the payroll manager happens to be away, on holiday, or otherwise unable timewise to complete all this without working through to 23.59 that day!
I don't understand why this is an issue - perhaps someone could explain. If the employees are paid, then someone must have worked out how much to pay them - so the payroll has been processed by someone. If this is done properly, I am guessing most employers now use payroll software to work it out, so clicking the "file RTI return" button should be easy to do on or before payment.
So late timesheets are not an issue - someone will have decided what to do about them. And illness of payroll staff is not an issue - as someone else has done the calculation.
Am I missing something obvious here?
Yes ...
When hourly paid employees are paid for their total hours up to the last day of each month, it is nigh impossible to obtain their time sheets from the supervisor, enter the figures and run the payroll, add overtime & holidays etc and submit to HMRC, especially if the employees work until 1700 hrs, and the payroll manager happens to be away, on holiday, or otherwise unable time wise to complete all this without working through to 23.59 that day!
I don't understand why this is an issue - perhaps someone could explain. If the employees are paid, then someone must have worked out how much to pay them - so the payroll has been processed by someone. If this is done properly, I am guessing most employers now use payroll software to work it out, so clicking the "file RTI return" button should be easy to do on or before payment.
So late timesheets are not an issue - someone will have decided what to do about them. And illness of payroll staff is not an issue - as someone else has done the calculation.
Am I missing something obvious here?
... if a bureau (accountant) runs the payroll, they will send the payroll to the employer to approve, when approval comes back the make the FPS submission. If, as often happens, the employer makes the payment or the contractual pay date is before the approval is given back to the bureau then they will not have made the FPS in time. The bureau could make the FPS when the payroll is run, but what if the employer has temporary cash flow issues and agrees with the employees to hold the payment a day/week whatever, this could tip the wages in to the next PAYE week or month!
Another problem is when the employer pays the staff net, tells the payroll department/bureau what has been paid and this is then grossed up for PAYE!
The lie of joined up government is a beyond a joke now. Why do you have to make weekly FPS submissions for employees, but monthly submissions for sub-contractors under CIS - it is not consistent. As Charlie says, the logical and sensible thing would be to treat PAYE as CIS and have the FPS for each month due by 19th following the end of the tax month. The situation we have at the moment is that we have a government smothering business in red tape when that government patently has no clue at all how business works.
Subbies in CIS
The lie of joined up government is a beyond a joke now. Why do you have to make weekly FPS submissions for employees, but monthly submissions for sub-contractors under CIS - it is not consistent. As Charlie says, the logical and sensible thing would be to treat PAYE as CIS and have the FPS for each month due by 19th following the end of the tax month. The situation we have at the moment is that we have a government smothering business in red tape when that government patently has no clue at all how business works.
If the real reason for RTI is to work out universal benefits then the answer to this question is easy; HMRC dont need CIS information because they require full monthly accounts from the self-employed,
Thanks
I understand there can be an issue with payroll bureaux although I would hope staff sickness is not one of them.
But the article talks about employers and their problems and there was no mention of outsourcing payroll, so I had (perhaps mistakenly) assumed that it was all about in-house payroll management. And a quick scan of the report suggests that HMRC are just talking about in-house (even though they do ask if you have outsourced).
As someone who used to do payrolls, we set up how we were going to deal with timesheets - typically paid a week in arrears which allowed time to process them. I retired just as RTI came in so have not had to work out how to deal with getting approval and filing. But my limited experience of the system is that it seems to cope with corrections - so being told something changed after filing an RTI return for a client is not necessarily a disaster.
But I do agree that the OOB requirement seems to be unecessary. I dont know if HMRC have got better at using RTI information - but they did not seem to know that they have current RTI information to work with to arrive at tax codes.
That doesn't explain why ...
... weekly paid employees have to have their income reported weekly, but weekly paid subbies are reported monthly, surely they would need to submit weekly self employed accounts.
Of course I can't see why any of this is relevant as the government want to stop working tax credits and have people on a living wage instead!
On the bureau question, in my experience most micro entities sub-contract payroll as it is too complex and time consuming - may be that is why they could only get a sample of 50!
OGA- you have a good point there
Careful what you wish for, OGA!! Let's not even think of getting weekly subbie information from the building trade (where all paper = anthrax)
But you have an excellent point- if only HMRC would allow monthly reporting of all employees whether weekly or monthly paid, then RTI would be less of a hassle.
If only.... If only.....
Another can of worms is the payroll run for fortnightly/4-weekly employees. But I'm not opening that one.........
Cannot disagree with Huw- reputable software is little more than "click the button" to file (we use Moneysoft) and brings clients to heel when they discover that "I forgot to tell you....." can mean "too late, mate" Amen to that advantage!
I can’t see what the issue is…
If there is no one to report the detail of the payment to HMRC, how come there is someone to make the payment to the member of staff? (Likewise if the timesheets are too late to report the payment to HMRC, how come they are still in time to make the payment to the member of staff?)
It seems that employers just don’t consider operating PAYE is important, and therefore outsource it to accountants etc, while trying to bypass the accountants by calculating and making wage payments themselves.
Maybe all wages should be required to be paid var HMRC, with HMRC deducting the tax before passing the money on – it could be a lot simpler and lower cost system.
Ha?
Maybe all wages should be required to be paid var HMRC, with HMRC deducting the tax before passing the money on – it could be a lot simpler and lower cost system.
I really hope that you are joking!
Me too.
I HAVE LITTLE DOUBT HMRC HAVE THOUGHT ABOUT IT!!
Maybe all wages should be required to be paid var HMRC, with HMRC deducting the tax before passing the money on – it could be a lot simpler and lower cost system.
I really hope that you are joking!
Me too.
A nightmare scenario, enough to alienate a significant chunk of the work force. I would be not be surprised, in the slightest, if the notion has crossed their minds. Maybe they just haven't worked out (yet) how to administer it!!
Lord help us all!!
Great points Charlie, Entrepreneurs don't have the time to be doing the admin and it's not that they don't appreciate the importance of such filings it's that it is not up there on the urgency of their to do list.
If these are systems that HMRC create then it is up to the advisors to put their own systems in place if this is a service they want to provide, to service it.
And yes, can really see giving HMRC the full wage bill would be interesting, trying to explain why to the employees they didn't get paid!
What about the one man accountancy firm
RTI is a nightmare for a one man band like myself. if I have to be available to file RTI reports whenever my clients actually pay their staff I will never be able to go on holiday, never be sick, never have computer problems, I will always have to work 7 days a week (instead of just sometimes) and expect phone calls at 11 o'clock at night from employers who have just paid their casual bar staff.
IT DOESN'T WORK FOR SMALL BUSINESSES OR SMALL ACCOUNTANCY FIRMS AND IS
A TOTALLY UNNECESSARY BURDEN.
Reporting should be once a month on the 19th.
Having a break
RTI is a nightmare for a one man band like myself. if I have to be available to file RTI reports whenever my clients actually pay their staff I will never be able to go on holiday, never be sick, never have computer problems, I will always have to work 7 days a week (instead of just sometimes) and expect phone calls at 11 o'clock at night from employers who have just paid their casual bar staff.
My clients used to know when the office was shut (because I told them) and when I needed information to process payrolls etc around office closures. OOB means you can file "before" the payment date - so if it is all processed before you go away it should not be a problem.
And yes I can imagine clients who get it wrong - but that is true about everything we do.
19th following- or even 10th
No idea why HMRC seem to think that OOB is a system that would work in the real world, clearly they were advised by big firms and accountancy firms who only deal with employers who have dedicated payroll bureaus or departments.
Down here in the real world, OOB makes zero sense. Especially given that anyone who has ever dealt with benefits and tax credits and the like know that the chances of one department talking to another or possessing up to date information is as likely as a lottery win!
A good compromise would be file by 10th following the month end, then payment by the 19th (allowing time for amendment before paying the tax, etc).
Otherwise we'll just end up with huge piles of paperwork when the automatic fines kick in and the inevitable appeals pile up. Under the current system if we go on holiday for two weeks through the end of a month then dozens of employers will be late filing - will that be a 'reasonable excuse'?
Getting it right by the 19th
A good compromise would be file by 10th following the month end, then payment by the 19th (allowing time for amendment before paying the tax, etc).
If you make adjustments between two filings with HMRC I can see lots of problems, penalty notice confetti.....
Payroll dates
The whole point to HMRC of on or before is their payment tracking system - they can find the payments to the employees if they are paid by BACs and as such they need the date of the actual BACs transfers.
Isnt there a privacy issue
The whole point to HMRC of on or before is their payment tracking system - they can find the payments to the employees if they are paid by BACs and as such they need the date of the actual BACs transfers.
I may have misunderstood, but this sounds like HMRC have open access to the BACS system and just need a name and date to find payroll payments.
BACS
Not open access - but they can at least chase up the BACS system to see if payment is been made as stated. Presumably, if they do not get confirmation of the correct BACS payment as on the FPS, they can persue it further...
(sorry late reply - off for a few days)
When a late FPS is acceptable - Updated today
https://www.gov.uk/running-payroll/fps-after-payday
This has some useful pointers / list of situations where a late FPS is acknowledged by HMRC as acceptable including:
Your employee doesn’t give you a P45 and is either paid less than £112 a week or has worked with you for less than a week.... .... Within 7 days of paying your employee
You can’t calculate or report your employee’s pay in advance because it’s based on their work on the day, eg harvest workers paid based on how much they pick.... ....Within 7 days of paying your employee
HMRC let you report monthly instead of the normal way because you were an existing employer on 5 April 2014 and had fewer than 10 employees on 6 April 2015.... ....Until 5 April 2016, you can choose to report monthly, on or before the last payday in the tax month. There are different rules for what to report in your FPS
Apart from the above there is the "within 3 days" rule not mentioned on this webpage.
Late FPS
https://www.gov.uk/running-payroll/fps-after-payday
Apart from the above there is the "within 3 days" rule not mentioned on this webpage.
Even HMRC can't keep track of all their exceptions and easements. They should have built Universal Credits around the possible not information that is changeable or unavailable.
but most salaries ...
... are not paid by BACs, certainly for small employers, they are bank transfers generally - not the same thing!
Payments
... are not paid by BACs, certainly for small employers, they are bank transfers generally - not the same thing!
It only applies to direct BACS (so far!) where the BACS submission has a "SUN"- small companies which access BACS via a Bank App will not normally have a "SUN" or be traceable (but there is at least one that is!).
Fraudsters will/do not actually use the RTI system so only mistakes will be caught.
No joke
"ringi wrote:
Maybe all wages should be required to be paid var HMRC, with HMRC deducting the tax before passing the money on – it could be a lot simpler and lower cost system."
When RTI was first mooted, this was what HMRC proposed as the main way forward. We fell hook, line and sinker for the system we have now.
As far as I'm aware this is still on the back-burner. One of the bigger stumbling blocks is the application of AEOs. The AEO deduction can't be made until you know the tax and NI deductions. So batting files back and forth; would employees ever get paid? Would you trust HMRC to get an AEO deduction correct, especially if there's more than one, and possibly a student loan deduction as well.