This year, all businesses – starting with the smallest first, in April – will be have to change the way they report PAYE. The Forum of Private Business has been working with HMRC on their Real Time Information (RTI) programme. Rachel Andrews, Financial Director of Andrews Computer Services and the Forum’s adviser on payroll issues, is one of the small businesses taking part in the first pilot of RTI. This is the second of her fortnightly blogs leading towards the introduction of this fundamental change.
Last time I outlined how I got involved with the pilot for RTI and this week I am going to offer a little more detail about the types of information businesses will need to send.
There are going to be 4 types of submission under RTI. The first type is a One-off Submission and will be required by businesses when they join the process. It is called the Employer Alignment Submission (EAS) and it contains all the static data about all of the employees that are on the payroll including those who have left during the current tax year, and their year to date earnings.
The second type of submission is the Full Payment Submission (FPS). This needs to be submitted between the day that the payroll is processed and the day that the money is paid. Even if the money is not paid at the end of the month, but paid on 23rd of the month for instance, the payroll has to have been calculated prior to that to send the information to the bank for BACS processing.
If employees are paid by cheque then these also take 3 days to clear so the FPS would need to be sent on the day the payroll is run. My payroll pay date is 23rd of each month, so I process the payroll on or before 19th of each month. Thus the FPS has to be submitted between 19th and the 23rd of each month. So my first monthly payroll run for November was done on Monday 19th and again the payroll was processed as normal and there was one extra step to send the FPS submission, once again no problems.
The Third type of submission is an Employer Payment Summary (EPS) and ONLY needs to be submitted if there are statutory payments to pay or reclaim, such as NIC compensation on statutory payments, Advance funding obtained from HMRC for tax refunds and statutory payments, CIS deductions suffered or an NIC Holiday. These only need to be sent if there are items that require HMRC to make payments or deductions back to the employer and then they need to be sent either monthly or quarterly depending on your payment period. An EPS submission is always sent as a Year to Date submission thus any alterations and corrections to the payroll affecting tax & NI will be reflected in the EPS figures the following month.
My company joined the pilot on 6th November 2012, so I decided to do the EAS immediately, so if there were any issues I would know about them quickly. In truth, it was no more complicated than running a P45 submission, simply a matter of pressing the button and sending the data.
The Fourth and final submission type is a National Insurance Number Verification (NVR) this is only required if you have a new employee with no NI number. Whilst you are waiting for this to be returned to you, use the employee’s date of birth and their gender in the NINO field. So a male employee born on 23 Jan 1980 would have a temporary NI number of 230180 M.
The Sage payroll system knows about these temporary numbers and will warn you every time you edit the record that you are still using one.
The obvious question is: “What do I do if I make a mistake?” The simple answer is, it depends on when you notice the error. If you notice it whilst you are running the payroll, correct it there and then before you send the FPS and you will be fine.
If you have already made the FPS before you notice the mistake, then the corrections will have to go through the next payroll. In the meantime you can adjust the amount the employee receives if for example you have missed off their overtime, but put the payment and then a corresponding deduction for the net amount needs to be put through the payroll next time thus correcting the year to date figures.