Sage published research findings last week showing that 76% of SMEs have no knowledge of the proposed alterations to PAYE Real Time Information.
Since PAYE was introduced in 1944, very few changes have been made to the system. Under Real Time Information, employers and online accountants will need to give HMRC information for National Insurance, PAYE and Student Loans each time they run a payroll, rather than at the Payroll Year End. If companies understand the way this will impact their operations, they will be able to minimise the impact by preparing in advance.
There are various different payroll providers in the UK and they offer different products and levels of support. It is not mandatory for providers to include the new changes within their software so the onus is on business owners to ensure they have the correct procedures in place.
Neilson Watts, from Sage’s Small Business Division, has advised small business owners to contact their payroll provider if they are unsure how the changes will affect them.
A lot of people have expressed concern as to whether HMRC is ready to implement such a large change after the disastrous logjam last year when the department migrated PAYE records to a new system. However, the National Audit Office says the Revenue has made significant progress towards improving its administration of PAYE.
HMRC still has a lot of work to do if it is to complete stabilisation by 2013 but this work is key to the introduction of RTI. Once RTI is in place, there will be an increase in the number of in-year amendments to PAYE records and this could lead to further data quality challenges.
The report also said that HMRC must define its PAYE operating model, explain how it will transform it to fit the RTO environment and test its implementation plans.
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