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Helping small businesses get to grips with Real-Time-Information (RTI)

Businesses had until April last year to be up-to-speed with Real-Time-Information (RTI), but for small firms it has not been plain sailing for all. The deadline for compliance has been pushed back, not once, but twice, as businesses attempt to get to grips with what has been described as the biggest shake-up to payroll in half a century.

All small businesses now need to have their house in order by October this year, or run the very real risk of unwanted and avoidable fines. Sage UK and Ireland is calling on firms not to underestimate RTI as something that can be left alone and sort at a later date.

RTI requires employers to start providing employee Pay As You Earn (PAYE), National Insurance and Student Loan information to HMRC every time they pay their staff wages, not just at the year end. This is part of a move from the Government to support the roll-out of their Universal Credits policy, as well as serving to fundamentally improve the overall operation of PAYE. By increasing the regularity of reporting, it enables HMRC to respond more efficiently to errors that lead to the under or over-payment of tax. Ultimately, it is designed to minimise the administrative burden of payroll year end.

Lee Perkins, Managing Director of Sage’s Start-up and Small Business Division, believes preparation is key for RTI and businesses must involve their payroll provider from an early stage to ensure the transition to this new way of working is smooth.

“RTI represents the biggest change to PAYE reporting for more than half a century and as a result, businesses have to totally re-think how they approach their payroll. Many businesses will have heard of RTI, but may not fully understand it. Despite its complex nature, RTI does not need to leave business owners scratching their heads.”

It does not matter if you employ just one person; businesses are now required by law to be compliant with RTI. For HMRC it hinges on the accuracy of the data that employers store about their employees, and so it’s vitally important for firms to take on a few simple steps to cleanse their data:

Find out what the legislative changes will mean to your processes by speaking to your payroll software provider. This will ensure you continue to pay your employees and HMRC on time, while also fulfilling the legislative requirements of submitting more frequently to HMRC.
Carry out a full data cleanse on your system, working with your employees to make sure all your data is correct. According to HMRC, THE 2009/10 employer returns showed there are 128 employees called Mr, Ms or Miss Dummy, 572 employees whose surnames ranged from “X” to “XXXXX”, 507 A N Others, 160 Tests, 100 Do Not Use, 75 staff called Casual, 11 Cleaners, nine Workers, six Students and 824 Unknown. Ensure all the information you have is up to date and that the correct names, date of birth and National Insurance numbers for all of your staff are recorded. If the records you submit do not match those at HMRC, you may trigger the creation of duplicate or inaccurate records which could result in incorrect tax calculations or HMRC compliance checks.
Communicate with your employees about how important the information they provide the employer is in ensuring the accuracy of their payroll, so they are educated on the implications of providing inaccurate information.
Store all your business information securely so that you can react quickly to any requests, demands or legislative issues that arise. Use HMRC recognised payroll software to reduce the burden on doing payroll manually every month; this will help automate processes, mitigate errors and give you peace of mind that you are fully compliant
Make the most of customer service. Some software, including many Sage products such as Sage 50 Payroll and Sage One Payroll has dedicated help desks for you to contact. Use this facility to check with them that you have all the data you need for your RTI submissions, and remember that all responsibility for paying employees correctly, and in line with RTI, rests with the employer.

If you are unsure how RTI impacts you and what you need to do to prepare, please do contact Sage: www.sage.co.uk/rti

This was posted in Bdaily's Members' News section by Sage UK .