Businesses Planning for Real Time Information Reporting
Most businesses are now planning to implement Real Time Information (RTI) reporting of payroll data to HMRC when it becomes mandatory in April 2013, according to a survey of 42 large businesses by KPMG in the UK.
The percentage of companies that plan to put in force RTI reporting has now increased to 86%. The figure significantly rose from a similar survey conducted by KPMG in March this year in which two thirds of employers had yet to begin to prepare.
But despite almost nine out of ten respondents saying that they had commenced planning, only a fifth (21 percent) had conducted a payroll data cleanse, a process which, according to KPMG, is one of the first and most basic actions to take when preparing for RTI.
Nearly two thirds (65 percent) said that they had not considered the cost of RTI to their business (another crucial element of the planning process) and less than half (44 percent) said they were confident that their current payroll could cope with RTI’s requirements.
Steve Wade, director at KPMG, commented: “It’s very good news that so many businesses are starting to plan for RTI but our data suggests that they really are at the very beginning of that process and they quickly need to translate thoughts into actions if they are to be ready in time.”
HMRC have recommended that businesses carry out data cleanse; talk to software payroll provider; review recruiting and payroll process for new employees; and talk to relevant stakeholders to brace for RTI.
Steve Wade continued: “With RTI becoming mandatory from next April, employers really do need to start implementation. If their employee data is up to date, they don’t operate multiple payrolls, have a low turnover of staff and their payroll provider is ready, the transition may be very smooth. But if this is not the case, they may well need to do some housekeeping before next April to reduce the chance of HMRC rejecting their data submissions and possibly imposing penalties.”
In KPMG’s experience, the most common issue for businesses is poor employee data, which explains why the data cleanse is the first step in the planning process. Errors frequently found are incorrect dates of birth, wrong names and inaccurate address data.
“It is important that employers have accurate employee data as HMRC may well reject an entire submission on the basis of a single error,” KPMG said.
Matthew Hunnybun Partner KPMG commented: “The old adage ‘garbage in: garbage out’ certainly holds true for RTI. Under the current PAYE regime, it’s not that much of an issue if a date of birth is wrong or an employee’s name is misspelled. Under RTI however, such errors can have serious consequences if HMRC is not able to match the data the employer submits with the information it holds for the employees because this can lead to penalties being charged.”
Beyond the employee data, the next most common issues tend to be around the payrolls themselves. Usually these fall into two categories: issues relating to the employers’ side of the payroll (such as running multiple payrolls which could be consolidated into simpler ones) or they are on the payroll suppliers’ side where in general they relate to the suppliers’ ability to cope with RTI requirements.
Matthew Hunnybun commented: “Important questions an employer should ask themselves are:
Do I currently obtain and submit all the information required by HMRC about a new employee to HMRC before I make the first payment to the employee?
Could I submit my year end summary (form P35) on 5 April?
Is my payroll always correct by the payroll cut off date? i.e. no adjustments no advances etc.”
Matthew Hunnybun concluded: “If the answer is no to any of these questions then the employer will have difficulties with RTI.”