The biggest change to the PAYE system since its inception almost 70 years ago is almost upon us and every employer will require to review their payroll systems and employee data to ensure compliance prior to the system going fully live this April.
In brief, the changes are required so that employers will be able to submit their weekly or monthly payroll data to HMRC in real time. This means that once the payroll has been processed, the live data needs to be sent to HMRC electronically on the same day that the payments are being made. This means that a computerised system must be used for payroll processing.
As HMRC will be checking and processing the data as it arrives, and updating the personal information it holds on every employee, the data being sent must comply with HMRC’s standards. This means that all employee personal data must be accurate. This presents particular issues for businesses with high staff turnover, or large numbers of casual or short-term employees. Every year HMRC receives incorrect or incomplete information on the annual P35 submissions but with RTI such information will cause problems with the ongoing payroll.
A recent study revealed that 128 staff were reported to HMRC as Mr, Ms or Mrs Dummy, while 40 people were apparently 200 years old after incorrect dates of birth were entered onto their employers’ payroll systems! Such errors will cause real problems for employers under RTI.