Finance Act 2017 included a number of legislative measures to facilitate the introduction of Real Time Reporting (RTR) for employers in respect of the application of Pay-As-You-Earn (PAYE) on their employees’ salaries. This is more commonly known as PAYE modernisation and will take effect from 1 January 2019.
With effect from 1 January 2019, employers will be required to report all employee remuneration and PAYE data to Revenue on or before the payment date of the employee’s remuneration on a real time basis. This will mean that Revenue will have access to PAYE related data each month at the time when the tax is deducted.
For many employers there is currently a focus on end of year reporting for PAYE related data with lesser consideration given to monthly reporting. For many types of pay, there is currently a time-lag between the date of payment by employers of taxes deducted under the PAYE system and the time when the information is reported so that employers have time to correct errors that may arise.
The arrival of RTR will mean that many employers’ current processes will have to change in order to meet the new timelines for reporting of employee pay and benefits. Broadly speaking, the payment dates under the PAYE Modernisation regime will remain unchanged but the requirement to report information per employee on a real time basis may well accelerate the dates for collating and reporting the underlying data on employee pay and benefits.
Where there are a significant amount of routine / recurring errors in an employer’s payroll systems, RTR will mean that Revenue will be aware of these errors and corrections. A high volume of error corrections may well raise the perceived risk of compliance failure by the employer and increase the risk of a Revenue audit. Employers should therefore take action now to ensure that their payroll systems and processes are ready for the impending changes. This will include ensuring that accurate payroll information can be obtained in time for RTR.
Employers should take the time now to review their employee data, payroll processes, policies and systems to ensure that they are ready to comply with their RTR requirements on 1 January 2019. In particular, employers should:
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