By Daniel Hunter
Lynne Cramb, payroll director at Manchester based DTE Business Advisers believes that with just twelve weeks until the new tax year, which will see the introduction of HMRC’s changes to Real Time Information (RTI), the reporting requirements for the collection of tax and NICs under PAYE, small to medium sized enterprises (SMEs) are still largely unaware of the changes which affect everyone without exception.
DTE Business Advisers surveyed 126 SME businesses at a recent RTI seminar it ran for SME clients and other accountancy firms to which it provides consultancy — and 96% of those companies said they or their clients were completely unaware of the changes, or know it’s happening in April 2013 but have a lack of understanding of how to prepare for it.
Real Time Information will require all employers to submit information, including details of earnings and the tax and NICs deducted, each time a payment is made to an employee — on or before payment day. This is regardless of whether employees are paid weekly, monthly or if they are casual labour.
“The introduction of RTI will, by necessity require employers to re-examine present processes they have in place and make adjustments immediately so they are ready for the changes in April,” explains Lynne Cramb, director of payroll, DTE Business Advisers.
“The lack of understanding by businesses surveyed that should be already making preparations was quite staggering. This is the largest change to payroll in sixty years and it seems to be going largely unnoticed at present.”
54% of respondents believed that RTI would create up to 25% more work for their organisation, and a further 29% believed it would be as much as 50%. This work would be created by obtaining the correct employee data required to satisfy HMRC’s criteria — 50% of respondents feel this will be the biggest challenge when implementing RTI. A further 41% of respondents believe extra work will be created through having to change payroll procedures to ensure reporting is within the restrictive time limits (on or before the payment date).
“The burden on SMEs is a worry — there are certain industries, entertainment and hospitality for example, where casual staff may be drafted in at a minute’s notice and paid the same day. The requirement by HMRC to pay tax and NICs on or before the employee is paid will challenge some,” explains Lynne Cramb.
“It’s hoped that HMRC will give SMEs a period to ‘bed in’ the new system before it considers levying any fines — but with only eight weeks to go until the system is to go live, it’s important that changes to processes and communication to employees has already started.”
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