Phil Nilson. HMRC RTI Programme

Transcription

1 Phil Nilson HMRC RTI Programme PROTECT Improving the operation of PAYE 28/05/2012 1

2 Pay As You Earn Improving the operation of Pay As You Earn Real Time Information 19 June 2012 PROTECT

3 Agenda Key facts What are the main changes for payroll? What won t change? Why reporting in real time? The Pilot What s happening now? What you need to think about now Help and Support PROTECT Improving the operation of PAYE 28/05/2012 3

4 Key facts The RTI Programme is on track and within budget Unless in the Pilot, most employers and pension providers will be legally required to submit PAYE information in real time from April with all employers routinely reporting PAYE in real time before October 2013 The structure of PAYE remains unchanged but the way in which employers and pension providers send information about PAYE to HMRC is fundamentally changing PROTECT Improving the operation of PAYE 28/05/2012 4

5 Key facts RTI is a priority government programme. It will help to: Improve the operation of Pay As You Earn (PAYE) Improve the customer experience for both employers and employees Achieve sustainable cost reductions for HMRC Close the tax gap Support the introduction of Universal Credit by the Department for Work and Pensions (DWP) PROTECT Improving the operation of PAYE 28/05/2012 5

6 What are the main changes for payroll? There will be a single process tying information and payment together Information will be sent to HMRC each time payments subject to PAYE are made to employees by way of a Full Payment Submission (FPS) See the Data Item List: Hours worked Passport number Employees earning below the Lower Earnings Limit Irregular employment indicator PROTECT Improving the operation of PAYE 28/05/2012 6

7 What are the main changes for payroll? Payroll Software will send PAYE information electronically: over the Internet via the Government Gateway; or via Electronic Data Interchange - until at least the tax year You can buy a payroll software package for this purpose or use one of the packages available free of charge, including HMRC s Basic PAYE Tools If you make payments by Bacs using a unique Service User Number, you will need to include a hash cross reference in RTI submissions PROTECT Improving the operation of PAYE 28/05/2012 7

8 What are the main changes for payroll? Forms P35 and P14 will no longer be required There are revised processes for dealing with Starters and Leavers PROTECT Improving the operation of PAYE 28/05/2012 8

9 What won t change? The need to give employees End of Year Certificates on form P60 The dates by which you must pay HMRC remain the same 19th or 22nd of the month (or quarterly equivalent) but you may need to submit an Employer Payment Summary (EPS) to tell HMRC: - That no monthly payment is due - The amount of Statutory Payments to be offset against a monthly payment - The amount of CIS deductions suffered to be deducted from a monthly payment PROTECT Improving the operation of PAYE 28/05/2012 9

10 What won t change? The need to submit P11Ds and P11D(b) if you provide Benefits in Kind and Expenses The way in which tax is deducted from payments to subcontractors under the existing Construction Industry Scheme PROTECT Improving the operation of PAYE 28/05/

11 Why reporting in real time? Submitting PAYE information in real time will: Over time, make PAYE more accurate for individuals Make PAYE simpler for employers Reduce HMRC s costs and enable it to deal more effectively with non-compliance Reduce Tax Credits error and fraud Enable HMRC to provide DWP with up-to-date information PROTECT Improving the operation of PAYE 28/05/

12 The Pilot The Pilot started as planned on 11 April 2012: 10 employers joined in April a further 310 employers will join in May/June 2012 by the end of September 2012, we aim to have 1,300 schemes reporting PAYE information in real time; and around 250,000 by the end of March 2013 HMRC is working with the payroll software developers and volunteer employers to iron out wrinkles in a controlled environment Please contact your software provider before 30 th June 2012 if you wish to participate in the Pilot PROTECT Improving the operation of PAYE 28/05/

13 Quotes from employers in the Pilot The first submission was very easy It took less than 2 minutes to submit an Employer Alignment Submission - with 12,500 records The first new starter was really easy to process RTI will save staff time PROTECT Improving the operation of PAYE 28/05/

14 What s happening now? HMRC is: Undertaking a Data Improvement Programme to support the successful implementation of reporting information in real time Continuing to raise awareness through a variety of channels Working closely with colleagues in DWP PROTECT Improving the operation of PAYE 28/05/

15 What you need to think about now Data Quality Payroll Alignment The impact on your organisation PROTECT Improving the operation of PAYE 28/05/

16 Data Quality Why is it important? HMRC receives employee payroll information from employers and matches it to the information we hold on the individuals. The main data items that contribute most to data quality errors are: - National Insurance Numbers - Full names - Dates of Birth Data Quality is important since poor data generates avoidable volumes of work for HMRC, employers and pension providers alike It is a key cause of employees and pensioners not paying the right amount of tax during the year Data is owned by the individual and we are all third parties to this data. PROTECT Improving the operation of PAYE 28/05/

17 Data Quality Quirky Facts 80% of data quality errors are caused by three data items National Insurance Number, Name and, Date of Birth Examples from PAYE employer returns received in 2009/10: National Insurance Number Name Date of Birth Over 2000 returns with the number AB Over 1000 returns with the number AA A N Other 128 as either Mr, Mrs, or Ms Dummy 572 whose surname was ranging from X to XXXXXX 824 with surnames of either unknown not known or known 40 people are apparently over 200 years old PROTECT Improving the operation of PAYE 28/05/

18 HMRC s Matching Rules for Payroll Data 1 National Insurance Number (NINO) 2 Name Surname 1 st Forename 2 nd Forename 3 Gender 4 Date of Birth 5 Address/Postcode PROTECT Improving the operation of PAYE 28/05/

19 What does poor quality data look like? Title in surname Use of Initials Use of Nickname Default NINO No. Works Number Surname Forename 1 Forename 2 NINO Gender DOB 1 ANB1 Bloggs J AB M 12/03/1984 Date entered incorrectly 2 ANB2 Smith Ted M 14/05/ ANB3 Mr Baker Andrew Unknown 01/01/ ANB4 Mouse Mickey ZZ L M 01/01/ ANB5 Amrshall SJ JJ B F 15/09/ ANB6 M T B Unknown 01/01/ ANB11 Smythe Albert Heathcote TG129823Z M 28/10/1948 Missing NINO Default Date of birth PLEASE NOTE THAT THIS IS DUMMY DATA Part of a double barrel surname entered in forename PROTECT Improving the operation of PAYE 28/05/

20 Data Quality - Common Issues and Solutions Key Data Items What matters? How to get it right? National Insurance Number Correct and properly formatted NINO of the individual in question * NINO is not mandatory - Leave blank if you do not have the NINO - Do not use default - Always use NINO for individual in question - Validate this with official documentation e.g. HMRC or DWP documentation. Name Full and official forename(s) and surname(s) - No initials - Enter forename(s) and surname in separate fields - Check correct order of names - Enter double-barrelled names into one field - Always validate spelling with an official document e.g. driver s licence, passport, etc. Date of Birth Correct and properly formatted DOB - Enter the full date of birth i.e. day, month, year - Do not make one up - Do not enter default a Date of Birth PROTECT Improving the operation of PAYE 28/05/

21 Data Quality Problems caused by inaccurate data Employers/Pension Providers: - Increased contact from employees/pensioners - Increased contact from HMRC - Higher volumes of tax code update rejections Employees/Pensioners: - Taxed incorrectly during the year - Overpayment or underpayment of tax - Effect on entitlement to state benefits and State Pension HMRC: - Duplicate records for employees/pensioners - Inaccurate tax codes being issued - Increase in volume of work to sort out issues PROTECT Improving the operation of PAYE 28/05/

22 What is HMRC doing to improve data quality? Targeted Support visits We are conducting targeted support visits to employers, pension providers, industry bodies and software developers. Over the course of the next year, we plan to visit: Targeted Employer Support (TES) Targeted Industry Support (TIS) Targeted Software Developer Support (TSDS) Communications and Guidance Improving the information available about data quality issues and how to resolve them. This includes: A dedicated Data Quality website Factsheets for employers, pension providers, individuals and software developers are available Social Media Support Go to: - Webinar - YouTube Video - HMRC Twitter Feed PROTECT Improving the operation of PAYE 28/05/ Improving the operation of PAYE 23/04/2012

23 Data Quality - What can you do? To help us improve data quality there are a number of actions you can take: Carry out your own data cleanse of payroll data using the suggested solutions mentioned before. Liaise with your software provider to find out how to cleanse your data more efficiently. Review your recruiting and payroll process for new employees to give the best chance that data is right first time. PROTECT Improving the operation of PAYE 28/05/

24 What you need to think about now Payroll Alignment What the changes mean for your organisation What is the impact on your business processes? What do you need to do to prepare? Assess Change Sustain PROTECT Improving the operation of PAYE 28/05/

25 What you need to think about now Who do you need to involve? Payroll Software provider/it department Bacs Approved Solution Supplier/Bacs Approved Bureau HR Finance Employees Bureau/agent PROTECT Improving the operation of PAYE 28/05/

26 The implications of getting it wrong A failure to implement the changes to PAYE reporting could lead to: Employees not receiving the amount of Universal Credit to which they are entitled; Employers and pension providers receiving unnecessary and unwanted contact from HMRC: Personal data issues Tax deduction issues Benefit entitlement issues And - of course employers and pension providers will not be meeting their statutory obligations and therefore running the risk of incurring penalties PROTECT Improving the operation of PAYE 28/05/

27 Help and support Real Time Information homepage Guidance on operating PAYE in real time FAQs for employers Data Quality homepage PROTECT Improving the operation of PAYE 28/05/

28 Help and support List of Data Items Payroll Alignment Register for alerts See payroll software that has PAYE Recognition PROTECT Improving the operation of PAYE 28/05/

29 Any questions? PROTECT Improving the operation of PAYE 28/05/

30 Real Time Information ( RTI ) Gordon Robertson Employment Taxes Senior Manager 19 June 2012

31 Assess and plan what does RTI mean for me? Who has ultimate authority and responsibility in your organisation to ensure the business is ready in time? Identify deadlines, costs, resources and IT requirements at outset Contact your payroll provider or commercial software provider: are you on a version which will support RTI what level of support do you need and can they provide it? can they help you join the pilot if you wish to join? Data quality - how good is your employee and HR data records (NI Numbers, working hours, Christian names etc) What is the impact on your processes? surrounding business accounting and management 31

32 New terminology and data handling EAS: Employer Alignment Submission - once only submission for employers with 250+ employees FPS : Full Payment Submission - main submission per payroll frequency, on or before pay day, with 100+ data elements per employee EPS : Employer Payment Summary - submission to highlight differences between FPS and amounts paid to HMRC for PAYE and NIC NVR : National Insurance Number Verification Request - used to confirm employees NI number EYU : Earlier Year Update - correction submission to amend errors to previous tax years Examples of key data and items to consider and get right: National Insurance Numbers, full names in correct data fields, correct and consistent spelling of names, dates of birth, gender, double-barrelled names, name changes (married women), 32 foreign names with complex spelling and formatting

33 Implications of getting it wrong Employers: will RTI raise PAYE and NIC compliance issues more quickly with HMRC? Late filing and late payment HMRC consultation with closing date of 31 August 2012 Employers and their employees: personal data issues, tax deduction issues, benefit entitlement issues, increased support and assistance resolving employee issues, higher volume of tax code update rejections Employees: not receiving Universal Credit for which they are entitled to, taxed incorrectly in year, over and underpayments of tax, impact on state pension entitlement 33

34 How can Anderson Anderson & Brown help? Regular Communication we are monitoring HMRC updates and communicating regularly via bulletins to our clients and contacts. Our RTI web page link: Project management managing the preparation of existing systems via testing and review work Outsourced Payroll Services we already offer a fully managed outsourced payroll service which will be RTI compliant for all our clients Software Solutions through the MIS team, we can assist with existing software upgrades or new software selection to minimise the impact on your resources Data Cleanse and Process Mapping review the existing data quality and carry out detailed mapping exercises to understand data sources for the 100+ data fields required for RTI submissions Tax and NIC risks will become more readily evident to HMRC seek resolutions now to avoid compliance problems later Senior Accounting Officers consideration of RTI compliance when preparing your annual 34 certification

35 Who needs to be involved? IT Department HR, finance and payroll departments lines of communication Senior accounting officers Employees Accountants and agents Outsourced payroll providers Pension providers 35

36 Auto enrolment Gordon Robertson Employment taxes senior manager 19 June 2012

37 Work Place Pension Reform Auto enrolment and compulsory pension contributions rolled out between Staging date depends on size of firm (i.e. number of employees) Minimum contribution = (rising to) 8% of earnings above Lower Earnings Limit (LEL) comprising Employee 5% (less Tax Relief), Employer 3% Employees can opt out, but would generally lose employer s contribution Opt outs must be re-enrolled every three years Employer must provide a qualifying company pension scheme: Permits auto-enrolment without need for members cooperation Employees auto-enrolled within 90 days of joining Meets minimum contributions requirements 37

38 How can Anderson Anderson & Brown help? By providing information and guidance to employers on their Auto Enrolment obligations Conducting an impact assessment Carrying out a compliance assessment on the suitability of the company s existing pension arrangements Advise on and help facilitate the introduction of Salary Exchange for pension contributions (which saves NICs for both employer and employees) Help employers with member engagement communications 38