There is less than a year before medium and large employers must report under the new regime. All employers will need to be using RTI by October 2013. Some companies, including some insurers, are already piloting the changes with HMRC.
Key issues and challenges
Every employer has a unique set of payroll systems and processes, therefore each will have a different set of issues to address. However, there are some key themes:
Employers will need to provide new information (for example passport numbers) and change the way information is submitted to HMRC. This may involve consolidating data from separate sources or gathering new data. Even if PAYE returns are being prepared by an outsourced payroll service, employers need to think about RTI as there will be information only they are able to provide which the payroll service will expect the employer to collect and forward to them.
Managing change will involve multiple (and layered) stakeholders who need to be engaged. There are complexities around certain sub-populations that need to be addressed and managed. Insurers with annuities in payments are particularly impacted.
Computer systems may need to be updated to handle the information. Even small changes could be problematic because any fixes need to be sustainable. Time is short and changes made to systems and reporting plans will need to be tested.
PAYE compliance is a component part of the Senior Accounting Officer obligations and SAO’s will need to be comfortable that the updated arrangements are fit for purpose on an ongoing basis. There will also be a PAYE penalty regime (yet to be published).
What should insurers do?
Insurers need to understand the extent of the changes and what needs to be done to prepare for them. It is all too easy to assume that RTI can easily be addressed by, for example, upgrading software. Typically we would expect insurers to map out a route to compliance in the following way:
- Diagnose the challenges – assess your business, employee and (if applicable) annuitant base to identify the potential key problem areas.
- Develop a roadmap – identify what needs to be done and estimate and commit the time and resources necessary to get to a solution.
- Implement – put everything into action before the timeline becomes too short.