ICPA Analysis: RTI & the impact for employers

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With the introduction of RTI from April 2013 there are a number of changes that employers will need to be aware of.

Firstly, there is the need to obtain employee information before the first payment is made to the employee:

• The employee’s name, date of birth, gender and NI number should be obtained.

• If the employee cannot supply an NI number then at least one line of the employee’s address should be obtained.

• If the employee is from overseas then a passport number should be obtained as well as their country of origin.

Secondly, employees will no longer have P45s to indicate taxable pay, tax paid and the tax code used in a previous employment. The P45 is to be replaced by a ‘Leaver Statement’. The intention is that the Leaver Statement will contain at least the same amount of previous employment information as a P45, but not have to be in the rigid format of a P45.

Thirdly, and possibly most importantly from an employer’s perspective, is that HMRC will be able to calculate the amount of tax and NI withheld from employees wages in a tax month, i.e. all payments made between 6th of a month and the 5th of the following month, along with employers NI liability.

If there are statutory recoveries to be claimed by the employer to reduce the liability to HMRC then these need to be submitted using an Employer Payment Submission, which indicates the amount by which the employer liability is to be reduced, before the payment becomes due.

Hence HMRC will be in a position to charge interest on any perceived underpayments on a month by month basis if the amount paid to HMRC by the employer is less than the total liabilities calculated from the RTI data.

During the pilot starting in April 2012 QTAC will be working with its customers who are engaged in the pilot to engineer a solution that will, as far as possible, reduce any risk of underpayments being made inadvertently.

• Alex Rowson is Technical Director at QTAC Payroll Products 

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at  www.icpa.org.uk  or email [email protected]  or by ‘phone on 0800-074-2896