At the recent Charity Finance Group (CFG) Members meeting Maggie Anderson from HMRC's Real Time Information (RTI) programme gave a talk on RTI, how it will improve the operation of Pay As You Earn (PAYE) and the impact it will have on UK charities and not-for-profit organisations.
So how will RTI affect you and how can you ensure that you get it right?
With RTI, a submission will be made to HMRC when employees are paid. It's hoped that the more regular reports about payroll and employee changes mean HMRC will have more accurate data. This data will also be used to help implement universal credits that should come into force in October 2013, and may mean the end of P45 and P46 forms and the dreaded year-end process.
To ensure that HMRC has implemented its new computer software correctly, it started a pilot programme this year, along with a number of volunteer payroll software providers. They will test controlled submissions throughout the year, using the test payroll software.
The first three submissions took place on April 11 and HMRC are reporting them as successful. Further test submissions will happen later this month, with another seven employers representing a range of size, type of organisation and testing circumstances.
A further 310 organisations will join the pilot this month. If it is successful, then around 1,300 more employers will be reporting RTI by September 2012.
One area that you should be aware of is personal data. The checks will be far more rigorous than current year-end checks, and if there are any anomalies then the online submission will fail. This online submission procedure has to be carried out when employees are paid.
For submissions to get accepted by HMRC, the employee's data has to be 100% correct, including:
• Company PAYE reference.
• Accounts office reference.
• Tax office number.
• Employee name and address.
• Employee NI number and tax code.
• Employee payroll code.
• Employment start and leave date.
• Employee date of birth.
Before RTI comes into force, it may be useful to run an audit of this information to ensure that all is correct.
There could be minor errors in your information that might see your submission rejected. There was a reported case where an employee's first name was Sarah, but she was known as Pat, and this was the forename on her payslip. Under new RTI processes, this employee data could cause the whole submission to be rejected.
At the CFG meeting, Anderson emphasised the role and importance of integrated systems. Her key recommendation was to ensure the quality of data by aligning the payroll with the various systems organisations use, ensuring records include correct national insurance numbers and personal information. She reminded organisations to bear in mind the Payroll Software provider/IT department, BACS approved software service, HR, Finance, Employees and Bureaux/Agent.
If systems aren't aligned, there is every chance that mistakes have been made when transferring information from one system to another, unbeknownst to you.
HMRC needs to spread the word on these changes sooner rather than later, as charities and and not-for-profits are the last organisations who can afford to pay penalties for incorrect or late submissions to HMRC.
Vasileios Kospanos is a vertical marketing executive at Access UK Ltd
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