Employers unprepared for real-time information reporting

Two-thirds of respondents have not started to plan for the implementation of real-time information (RTI) payroll reporting, according to research by KPMG.

The research found that almost a fifth (18%) of respondents were not aware of the upcoming RTI deadlines and the likely impact of the change.

Under RTI, employers will need to submit payroll data to HM Revenue and Customs (HMRC) electronically on a real-time basis each time a payment is made (monthly in most cases), as opposed to the current system where data is returned annually.

It is being phased in on a trial basis from April 2012, with all employers required to comply on a phased entry basis between April 2012 and October 2013.

The research also found a number of the employers surveyed are likely to have issues around consolidating their current payroll systems. Over half (52%) were responsible for two or more PAYE reference numbers, with 26% running more than four each requiring an end-of-year submission.

Over three-quarters of respondents (78%) were operating more than one payroll, with 42% running more than four. Over one-third (38%) were running more than one pay period.

The research also found many employers were still relatively low-tech in their approach to payroll. One-quarter (25%) of respondents said they did not use software to run their payroll, while 22% still make payments by cheque and 49% said their payroll was not linked to their HR systems.

Almost half (42%) of respondents said they had not reviewed their payroll processes within the last year, and 18% said they had not done so for three or more years.

Matthew Hunnybun, tax partner at KPMG, said: “As well as revealing a worrying lack of [preparation] with two-thirds of respondents not even starting to plan for RTI, our survey also shows that many employers have quite complicated payroll systems and processes.

“In most cases, it will be much cheaper and more efficient for them to consider consolidating and reviewing these before implementing RTI rather than converting multiple systems.

“No-one will want to go through the aggravation of overhauling their payroll systems for RTI only to have to do it again for auto-enrolment, or vice versa, so it is best to look at the two issues together. And then while at it, it makes sense to think about improving overall payroll efficiencies.

“What we are finding is many businesses are taking the opportunity to really review their pay and benefits provision as part and parcel of complying with these two major changes coming up.”

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