An Expert's Perspective on the Introduction of Real Time Information (RTI) for Payroll


Real Time Information (RTI), which sees PAYE reported on or before the date payment is made to an employee and changes reported as and when they occur (rather than at the end of the financial year) has been with employers, pension providers and payroll bureaux since April.

 

While the migration to Real Time Information has been largely successful there have been a few teething problems to overcome. Ken Davies, Mitchell Charlesworth's Director of Payroll outlines the first few months of RTI from an expert's perspective and discusses what the future will bring.

STOP PRESS: In recent days HMRC have announced that the temporary relaxation of Real Time Information (RTI) reporting rules has been extended from October 2013 to April 2014. The main changes are outlined below:

Extension to temporary relaxation of Real Time Information (RTI) reporting rules:

HMRC has announced that the temporary relaxation of Real Time Information (RTI) reporting rules has been extended to April 2014.

Following widespread concern and criticism from employers and other stakeholders leading up to the April 2013 deadline, HMRC announced that allowances would be made for businesses with fewer than 50 employees. Under this relaxation, where these businesses paid their staff regular pay in advance of a main payroll run, they could report their payrolls on a monthly basis until October 2013.
Now, after further consultation, the deadline has been pushed back even further for these businesses until April 2014.

Employers should note however, that they are still required to report through the new system but only need to do this once per month, rather than each time they pay their employees.

This extension is particularly good news for those businesses who may be trying to agree with employees an amendment to their employment contract to facilitate payment on a monthly basis. It is also a sensible decision as it allows HMRC a bit more time to analyse specific problems that may be faced by the smallest businesses.

Teething Problems:

The introduction of RTI was the first time that employers had to provide all personal data of their workers including the number of hours worked.

HMRC then crossed checked this data with their database and advised employers of correct or omitted National Insurance numbers.  Unfortunately, many of the numbers were incomplete (missing a final digit) which in turn caused payroll software to reject the amendment.

It is worth checking with your software provider for guidance or software update.

Underpayment Notices:

The normal RTI file contains tax and any National Insurance deducted but does not include details of offsets such as any Statutory Maternity Pay, Statutory Sick Pay or, for subcontractors, tax they have suffered from a contractor.  Where this is the case, a second RTI submission referred to as an Employers Payment Summary (EPS) is required.

Unfortunately, the EPS does not contain a reference to the relevant tax period.  Therefore, where HMRC could not see a submission, they request a re-submission.  However, as the file does not contain a tax period reference it requires an employer to contact HMRC to ensure it is allocated to the correct tax period.

Clearly this is an inefficient process and defeats the main objective of RTI which is to make the entire payroll submission process more streamlined.

Hopefully this is a temporary issue but we have seen some instances of where missing general RTI has not been received by HMRC or where data did not match. When this occurs, these incidents are escalated and we are awaiting feedback from HMRC.

Contact our Payroll Department:

For more information about Mitchell Charlesworth's Payroll Services email: ken.davies@mitchellcharlesworth.co.uk.

Post a comment

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business