New Payroll Reporting Requirements Starting Soon
The business of managing payroll is notoriously difficult, requiring total accuracy across a vast range of metrics. This difficulty is further amplified by the fact that rules and regulations are in a constant state of flux; any payroll management team that does not pay close attention to these changing obligations is in serious danger of non-compliance, which can lead to hefty fines being imposed by HMRC.
Such a change will take place next month, when HMRC will make it mandatory for employers to accurately record the hours worked by employees in relation to payments that have been made. From the 6th of April 2005, these details will have to be included in RTI (real time information) PAYE returns. Ahead of the change, HMRC recently carried out a consultation on the newly-drafted legislation, which aims to 'improve the data HMRC collects from its customers'.
The draft legislation included an explanatory note, confirming that the new regulations will specify additional information about employees’ hours that employers are required to include in the RTI returns they are required to make to HMRC. If such information cannot be determined, the employer will have to provide a valid reason that refers to one of the specific descriptions outlined in the new regulations.
Establishing the additional information will be dependent on the way in which an employees wages are determined. For employees paid at an hourly rate, the employer will have to report how many hours were worked that determined the relevant payment. For workers who are paid based on a specific number of contractually-determined hours, the employer must report exactly how many hours of work the contract required for the given pay period. If such an employee worked any hours of paid overtime, these must also be reported.
Where employee payments are not determined on any of the bases noted above, employers will have to report the number of relevant hours as zero and specify a description of the payment from one of the following:
- Statutory payments (such as sick pay) that are processed through payroll
- Benefits in kind processed through payroll
- Termination or redundancy payments
- Payments based on output, such as those paid for piecework
Where pay consists of a number of different element, each of these elements must be recorded and reported.
The upcoming changes are going to add yet another layer of complexity to payroll management, which is already extremely complex as it is. Many companies will have to modify or even completely replace their existing HR and payroll systems. By far the best way to maintain total compliance and reduce a company's workload is to outsource payroll management to a trustworthy, reliable and BACS-approved bureau like Bachmann Group.
For further information about our standard-setting payroll management services, please browse the Bachmann Group website or get in touch with a member of our dedicated customer service team.
