A quarter of SMEs are unaware of major changes that will affect payroll reports by April 2013, says a new survey by the Federation of Small Businesses (FSB). FSB surveyed 1,700 small organisations, and found that only 16 per cent of respondents were fully aware of the Real Time Information (RTI) programme.
From April next year, employers will be legally required to report PAYE in real time. This means that information about all PAYE payments needs to be submitted to HM Revenue and Customs (HMRC) online each time a payment is made. This is replacing the current system of submitting all payments at the end of the year.
Worryingly, a large proportion of SMEs are completely unaware of the new system, despite it being critical to the success of Universal Credit. A further 60 per cent of firms say they have had no communication from HMRC about the changes.
National chairman of the Federation of Small Businesses, John Walker explained: “Without adequate communication and education from government, small firms won’t be able to prepare. It just isn’t fair if they’re then penalised for not complying.”
RTI aims to simplify reporting new employees and leavers as well as make the payroll process simpler and less burdensome. It will also support the payment of Universal Credits to those who receive them. However, 66 per cent of respondents to the FSB’s survey are not confident that RTI will achieve these aims.
One in four people working in the UK are paid using Sage software. Managing director of Sage’s small business division, Lee Perkins, offers SMEs some advice: “I can understand that with the changes coming in next year, many business owners will naturally be tempted to focus on the more pressing day to day issues impacting their company, but this could be short-sighted. HMRC is currently working hard to put it on the radar of everyone, but if you’ve not heard from your payroll software provider on RTI by now you need to be asking some serious questions about their readiness for it.
Here are Sage’s top five tips on preparing for RTI.
1. Legislative changes
Find out what the legislative changes will mean to your processes by speaking to your payroll software provider. This will ensure you continue to pay your employees and HMRC on time, whilst also fulfilling the legislative requirements of submitting more frequently to HMRC
2. Data cleanse
Carry out a full data cleanse on your system, working with your employees to make sure all your data is correct. Ensure all the information you have is up to date and that the correct names, date of birth and national insurance numbers for all of your staff are recorded. If the records you submit do not match those at HMRC, you may trigger the creation of duplicate or inaccurate records, which could result in incorrect tax calculations or HMRC compliance checks
Communicate with your employees about how important the information they provide the employer with is in ensuring the accuracy of their payroll, so they are educated on the implications of providing inaccurate information
4. Information security
Store all your business information securely so that you can react quickly to any requests, demands or legislative issues that arise. Use HMRC recognised payroll software to reduce the burden on doing payroll manually every month; this will help you automate processes, mitigate errors and give you peace of mind that you are fully compliant
5. Make the most of customer service
Some software have dedicated help desks for you to contact. Use this facility to check with help desks that you have all the data you need for your RTI submissions, and remember that all responsibility for paying employees correctly, and in line with RTI, rests with the employer.