Umbrella companies should start thinking about the changes they will need to make to their payroll software so that they can implement HMRC’s Real Time Information system.
Under Real Time Information, employers will provide the Revenue with details of National Insurance and income deductions each time they pay their employees, rather than at the end of the payroll year as they do now.
David Gauke, the exchequer secretary to the Treasury, recently explained that companies will need to update their software in order to comply with the new system, but in the long term Real Time Information will save employers money. He went on to say that PAYE operating costs would be reduced, as would the cost of upgrading software. He also added some words of reassurance to small businesses when he said the government was looking into ways to help them comply with the new changes.
In addition to saving money for employers, Real Time Information should reduce error and fraud, provide a tax system that is more transparent, support pensions administration and improve the quality of national statistics, Gauke continued.
However, in order for the system to be a long-term success, employers must input accurate data. This is one of the major challenges that HMRC and employers will need to work together to achieve, he concluded.
Given HMRC’s recent dismal track record when it comes to implementing new systems, it may take a few years before Real Time Information is up and running efficiently!
© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: this morning i was expecting to be late, in fact… by manwithface
