By John Black, RTI specialist at MidlandHR

If you are an employer and haven’t already heard of Real Time Information (RTI) – and HM Revenue & Customs (HMRC) will certainly be hoping that you have by now – then the clock has started ticking in terms of preparing for the changes which are due to come in to force between April and October 2013.

John Black, RTI specialist at MidlandHR, a leading provider of talent management, workforce planning, HR and payroll solutions, answers the most commonly asked questions about RTI, providing a quick, fast guide on what you need to know, what you need to do, and when you need to do it by.

What is RTI in a nutshell?

RTI is about to become one of the biggest things to hit payroll since the introduction of Pay As You Earn (PAYE). It fundamentally changes the way in which employers and pension providers send information about PAYE to HMRC and affects every UK organisation that employs members of staff.

Aimed at improving the operation of PAYE, its main objectives are to:

- Make PAYE more accurate for individuals
- Make PAYE simpler for employers
- Reduce HMRC’s costs
- Reduce Tax Credits and error fraud
- Enable HMRC to provide The Department for Work and Pensions (DWP) with up-to-date information for the new universal credit system

When is it happening?

All employers will be mandated to join RTI between April and October 2013. There are virtually no exceptions.

How can employers prepare and how will it affect HR and payroll?

RTI changes the goalposts for most organisations’ payroll systems, extending beyond just the mechanics of the electronic exchange of information.

The ‘real time’ nature of the information being sent to HMRC means that organisations will need to sharpen processes and employ best practice to ensure that the right data is captured. Employers would be wise to plan as early as possible in reviewing their data quality, thereby giving themselves time to implement more robust processes of data capture.

Organisations need to spend time ensuring the data they have is compliant with HMRC requirements for RTI (Some of the most important of these are the identifying information:

- full name
- date of birth
- gender
- address
- NI number).

Although NI number isn’t mandatory it is important to HMRC.

Once data audit and cleansing exercises are complete and data capture procedures are reviewed going forward, knowing how to submit the files using your software comes next.

As well as RTI, many payroll departments will be faced with new duties to support Pensions Reform, in particular the auto-enrolment of eligible employees. This must also be planned into operations to ensure that organisations are ready for their staging dates (for many employers this will clash with RTI going live).

How can technology be adapted to fit HMRC legislation?

Payroll technology has to be radically adapted to facilitate the new submissions and the best payroll technology suppliers will not only be developing software to fulfil RTI submission, but also providing solutions to help prepare for the changes. Data quality from day one of employment is now vital. Employers should ensure that they keep in close touch with their supplier to find out what they are doing to prepare for RTI and to ensure that their systems will meet HMRC’s deadlines.

MidlandHR, for example, is taking part in HMRC’s RTI Pilot. Engaging in this learning process alongside our customers has given us the opportunity to lead the market in RTI-ready software and services and ensured that our iTrent software was already RTI-ready at the beginning of this year.

With a complex change such as RTI, it is vital to engage at the earliest possible stage and build resilience, accuracy and ease of use with rapidity. Quite simply, feedback, lessons learnt and practice will lead to the best products.

What benefit will RTI bring to employers?

The main benefits to employers may not be fully realised until everyone is on RTI and P45s are withdrawn. In the meantime there seems to be a fair trade off in terms of losing some of the year-end routines and e-filing of P46s/P45s but ’gaining’ the submission of returns every pay period.

Feedback from MidlandHR’s pilot customers has, so far, been encouraging. The main positive impact that organisations expect to see as a result of RTI is that they will be able to regulate and produce high quality data.

What is all of this going to cost?

It is still hard to say what costs will be involved in terms of time, software and process changes until full feedback from the pilot is received, as the size and scale of the programme may change.

The type and size of business could be a major factor in that employers with a relatively stable workforce will be impacted less than those with a high turnover of employees and large numbers of casual/short term labour.

I’ve no idea if my organisation is RTI ready. What should I do?

It was recognised from the beginning that RTI can’t succeed unless payroll systems are able to generate and submit the correct returns, as in all but the smallest organisations it’s impractical to do this manually. RTI needs knowledge, planning, control and good data quality. If you are not sure if you are fully prepared, it’s worth considering having an RTI health check from a professional organisation that knows what it’s on about when it comes to RTI.