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Using outsourcing to provide effective payroll and employment tax services

15th Feb 2024
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Initor Global UK provides premium outsourced services to UK accountants and businesses.

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UK accountants will know the market for experienced payroll professionals is hotter than ever. Keeping on top of regulatory requirements and government announcements affecting clients with even the most straightforward payroll needs can be challenging if you do not have access to experienced payroll professionals.

If you are a UK accountant looking to extend the scope of services offered to clients to include payroll, or improve the effectiveness of your existing payroll services, you should consider outsourcing to an offshore supplier.

Initor Global UK | outsource accounting | tax
Initor Global UK

Many accountants do not know where to start to identify those parts of a payroll service suitable for outsourcing. In this blog we break down some of the barriers accountants perceive while providing examples of the benefits available from outsourcing payroll work.

What does outsourcing payroll mean for accountants and their clients

Outsourcing payroll services means a specialist supplier will take responsibility for operating all, or specific parts of the payroll service accountants provide to clients. Accountants can outsource part of a service, such as preparing the monthly payroll run and issuing payslips to employees, or the end-to-end process, from setting up a payroll service with HMRC to calculating contributions to pension providers.

Outsourced services are usually provided offshore from areas such as India or Asia and will be fully compliant with HMRC’s rules and regulations as well as data protection requirements. Outsourcing partners will have experience of cloud-based payroll software and will provide a seamless service to clients. Integrating outsourced services with the operating framework of internal controls, systems and performance reporting already used by an accountant is essential to ensure the effectiveness of services provided.

Why outsource payroll services?

A compliant payroll service

Many accountants struggle to find the experts they need to provide a fully compliant payroll service. With an outsourced solution, accountants have access to a team of experts who provide assurance every payroll run is accurate and filed on time, ensuring the risk of incurring fines or penalties from HMRC is reduced.

Reduced costs and increased quality

The cost of outsourcing payroll services is typically 50% less when compared to the equivalent services provided in-house. With an outsourced payroll service, there is no need to maintain an in-house team at all. With an outsourced partner focused on delivering the tasks and processes clients need, the quality and accuracy of payroll calculations is improved, reducing the risk of fines from HMRC.

Clients can access more services

Using an outsourced solution allows accountants to scale and confidently offer payroll services to meet clients’ needs. It also ensures accountants have the capacity to deliver growth in revenues, and that clients have access to payroll and employment tax services as they employ more people.

Reduced risk of service failure

Many accountants provide payroll services using a team of qualified individuals. The service is seen as specialised and is not part of the core accounting business. However, reliance on a small team presents a risk of service failure should individuals leave at short notice, and if a suitably qualified replacement cannot be found. With an outsourced payroll solution, accountants have access to a team of experienced individuals who can guarantee the continuity of service needed.

Removing recurring tasks helps develop people

Some accountants are nervous about outsourcing any service because of the perceived negative reaction among their team. However, the removal of recurring tasks from the day-to-day workload of payroll professionals means they have more time to spend understanding the needs of clients and offering a wider range of services. Less time is spent on tasks such as processing the monthly payroll and data management, allowing individuals to focus on their professional development and building the skills needed for their future careers.

When is the best time to outsource payroll services?

Accountants need to carefully consider the skills and expertise available to deliver payroll services, particularly when preparing plans for growth or extending the scope of services offered to clients. Payroll is a specialised profession and requires qualified individuals who are up to date with industry developments and legislative changes. Not all accountants will have sufficient capacity to meet the requirements of regulators, particularly when statutory deadlines are due, which can expose clients to the risk of fines and penalties from HMRC. To mitigate these risks, accountants should consider outsourcing at key stages in their business planning cycle or when a peak of work is expected, such as the tax year end or start of a new tax year.

Which payroll services can be outsourced?

All processes and tasks needed to operate payroll services on behalf of your clients can be outsourced, from setting up a payroll for the first time, to filing information with HMRC at the tax year-end. Some providers can help set up statutory pension schemes such as NEST and submit the necessary documentation to the Pensions Regulator.

If you are an accountant looking to outsource payroll services, increase margins and improve the quality of services provided, you can book a video call with one of Initor Global’s expert advisors using this link or send an email to [email protected]. You can also read our detailed guide to outsourcing payroll services.