HMRC has also recently announced that the introduction of penalties for RTI non-compliance will be staggered. The new timetable will start with in-year interest on any in-year payments not made by the due date from April 2014. In October 2014 we will see the introduction of automatic in-year late filing penalties, with automatic in-year late payment penalties being introduced from April 2015.
RTI was widely viewed as the biggest change to payroll in over 70 years, since PAYE (Pay As You Earn) was introduced. Under the new legislation businesses across the UK were required to report payroll information electronically to HMRC “on or before” each pay period. This was a change from the traditional way which involved reporting this information only once a year. For businesses which pay employees on a weekly basis, this meant that they would go from reporting information to HMRC once a year to 52 times a year.
After the initial implementation there were reports of many smaller businesses struggling to comply with RTI, so HMRC introduced a relaxation policy to allow certain organisations some more time to make the transition.
Employers affected by the relaxation would still be required to make RTI submissions to HMRC, but could do so at the end of their standard payroll run, rather than “on or before” the payroll run. While this policy was originally only planned to run until 5th October 2013, it was later extended to 5th April 2014.
This period is coming to an end shortly, which means the businesses in question will need to begin fully complying with RTI. This doesn’t need to be a cause for concern, providing they are fully prepared with the right processes and systems in place. By preparing early, the transition to full RTI reporting can be stress free and businesses can avoid any financial penalties due to non-compliance.
To make the RTI compliance as simple as possible, there are a few key steps which businesses should take. While businesses may have already implemented these steps, it is important to go back and double check sooner rather than later.
Firstly, employers should ensure that they have payroll software in place which can handle their specific business requirements. With a wide range of free and paid for software options available, by working out exactly what your business needs are you can guarantee that you have the best possible solution in place. Many smaller businesses opted for free software options from commercial providers in the run up to the initial introduction of RTI. This was partly due to the restrictions on HMRC Online PAYE Tools. After an upgrade to the software’s minimum requirements, this was no longer a viable option for many smaller businesses.
Feedback from employers who have been complying with RTI from the beginning told us that data accuracy is key. Ensuring that you have correctly set up employee records and are maintaining these with up to date information can help make the transition run smoothly and help you avoid financial penalties.
As with any major change in legislation, educating yourself on the change and the effect it will have on your business is a vital step to take. In the run up to the introduction of RTI IRIS trained over 13,000 employers and payroll professionals to help them understand the legislation and the processes they needed to have in place to achieve compliance.
By starting to prepare as early as possible, and ensuring you have the right systems and processes in place, making the transition to RTI should not cause any major issues for small businesses.
Mark Paraskeva is CEO of SME Division at IRIS Software Group.
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