Time is running out for businesses that still need to prepare for the introduction of Real Time Information (RTI).

From April 2013, employers must report to HM Revenue & Customs on their employees’ tax, national insurance contributions and other deductions when or before their wages and salaries are paid. Employers will need to send their first return – called a Full Payment Submission (FPS) – for salary or wage payments made to employees on or after 6 April 2013. Employers with 250 or more employees will also have to have to send an Employer Alignment Submission before their first FPS.

Providing this Real Time Information requires the use of specific software and relies on employers having accurate employee data.

Employers should act now.

Being able to comply with the RTI requirements takes preparation. Employers cannot leave this to the last minute.

  • They must gain an understanding of what, when and how data must be filed.
  • Data must be accurate and complete. Any gaps, such as dates of birth or full first names, must be filled in. RTI data will be required even for employees being paid below the national insurance lower earnings limit.
  • Employers need to consider the technical implications, including whether their existing payroll software will be RTI-compliant.

Software

The software implications of RTI compliance are significant. If their existing software is not being updated, employers need to choose their new, RTI-enabled payroll software carefully to make sure it is appropriate for business as well as RTI needs, as well as being cost-effective.

Some employers may decide that this could be an appropriate time to switch to using a payroll service. Again, thought should be given to the choice and cost of service provider.

Training

Payroll staff will need specific training on new processes and software. Demands on payroll staff will increase substantially under RTI, due to strict filing deadlines. Understanding how to deal with specific issues, such as reporting of cash payments to staff working in the hospitality sector will be important.

All employees will need to be made aware of the introduction of RTI, the potential impact on their pay (as PAYE adjustments may be made during the year), and the importance of keeping their employer and HMRC up-to-date with any relevant changes in circumstances.

HMRC View

HMRC recognises the challenge for businesses gearing up for RTI. They have warned: “There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the lower earnings limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”

Penalties

HMRC has announced that there will be no penalties for late FPSs this year, nor will there be automated late payment penalties until April 2014. However, penalties may apply for the tax year 2013/14 if HMRC discovers inaccuracies on FPSs.

Preparing well before April 2013 is the best way for employers to minimise their risks of incurring any RTI-related penalties.

We can help

If you have any queries or concerns, please contact us. We can guide you through the preparations you need to make, to ensure you are well placed to cope with the changes.