April 6th 2013 saw the biggest change to payroll administration in a generation. Not to how a payroll is actually calculated, but to the way in which payments to employees are reported. The new system is known as RTI (Real Time Information) and you can’t have failed to come across some references to it in your email or postbag!
Now that the dust has settled a little, I was reflecting on how the switchover had gone, what the ongoing challenges are, and what we, at Freeman Accounting Services, need to be aware of and improve in the coming months.
For our payroll clients, hopefully you’ve not noticed too much of a change – we’ve desperately tried to shield you from what has been a massive undertaking on our part to understand the new requirements and put in place processes to make sure we fully comply. For those of you running your own payrolls, I wonder how the experience has been for you…? Please let us know.
From my own personal perspective, the key challenge is trying to satisfy the requirement to make an RTI submission to HMRC on or before the actual date of salary payments. When you are not personally making those payments (clients physically make the bank transfers themselves), it can feel that you are operating “blind”.
To counter this, we have put in place two processes:
- For clients for whom regular amounts are paid out every month, we have encouraged them to set up monthly standing orders to pay salaries, and advise us of the date of that standing order
- For clients for whom payroll amounts might vary from one month to the next (new starters, pay increases, overtime payments etc), we ask for any changes to be communicated to us by the 20th of the month and then to actively confirm back to us the intended payment date once we deliver the payslips.
I think that mostly things are working fine now. HMRC has given a grace period over the first few months, with no penalties raised for late submissions, but from April 2014 this is to change.
Therefore, between now and then, we will be working together with our payroll clients to iron out those few instances where we do not get swift confirmation to go ahead and file, to be sure that we can maintain a status of 100% penalty free!