Are you ready for Real Time Information?

The introduction of real-time reporting of payroll information by HM Revenue & Customs (HMRC) could mean big changes for FDs. Matthew Courtiour, Employer Solutions Manager at Grant Thornton UK LLP, Southampton highlights three issues to be aware of, and our guide to how to prepare for RTI.

Real time information (RTI) for reporting PAYE/National Insurance deductions is fast approaching. A pilot is now well under way and by October 2013 all employers will be required to automatically submit details about tax and other deductions to HMRC each time they make a payment to an employee, rather than just once at the year-end.

For FDs, there are a number of things they may want to consider before that October 2013 start date.

1. Penalties for incorrect filing
To begin with, it is worth considering that a penalty regime is being introduced for RTI filings which are late or wrong . Although this is still being fleshed out, FDs who are also the senior accounting officer – and have therefore verified that payroll processes are, as far as they can tell, completely fit for purpose – will be held individually accountable.

Therefore, FDs will want to make sure that all relevant stakeholders in the business – all those who are involved in the payroll process – are fully up to speed, fully aware of their responsibilities and fully advised.

2. Put integrated processes in place
It is also a good time to make sure all the relevant interfaces are working and that a process is in place to ensure HR, finance and payroll (if it’s separate) are all talking to one another and understand their own responsibilities.

If you use a payroll outsource provider, you should prepare by talking to them to ensure their product will meet your needs. Make sure that the most basic information is correct for every person you pay (name, date of birth, National Insurance number, and gender). Consider HR systems and processes and how this might need to change under RTI, and prepare any staff training.

3. Identify compliance issues now
FDs may also want to take this opportunity to identify any potential difficulties in complying with the changes. HMRC has indicated it is looking for a ‘soft landing’ around RTI, meaning it may give companies some leeway around compliance.

However, FDs operating in specific sectors should begin looking at how RTI will work for them. If you are in the leisure/entertainment industry, for example, and have bouncers on the payroll being paid at three o’clock in the morning, you may need to assess how that will work in terms of filing in real time.

Organisations of a certain size may also face more onerous procedures as a result of RTI. While smaller businesses will not face the same kind of connectivity issues as larger organisations, for example, the changes will put a lot more onus on certain individuals and smaller teams.

With RTI changes on the horizon and some uncertainty remaining about exactly what will be required of companies, now is the time for FDs to begin assessing what reporting real-time information will mean to their business and how they can make all departments aware of their individual responsibilities.