200,000 employers around Ireland getting ready for major change to Revenue’s new payroll reporting system

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200,000 employers around Ireland getting ready for major change to Revenue’s new payroll reporting system

Just 23% of employers in the country have taken the required first step in the process

The Irish Tax Institute, the SFA and the Institute of Directors are today launching a new guide to help over 200,000 employers across Ireland to get ready for the biggest change in Revenue’s payroll reporting and compliance regime in almost 60 years.

A new real-time technology-driven system known as “PAYE Modernisation” is going live on 1 January 2019 with the first deadline in the process just eight days away. Employers are being asked to get their employee records in order by 31 October so that their systems can go live in January.  While just over 45,000 employers have uploaded their employee records to Revenue’s system, it accounts for only 23% of the total employers in the country, meaning much work is needed in the coming weeks.

Up to now, employers logged payroll returns containing details of each employee’s tax and pay with Revenue once a year, on the P35 return. From 1 January onwards that process ends and employers will now be submitting payroll reports with employee payment and deduction details to Revenue in real-time; be that weekly, fortnightly or monthly, depending on when they pay their employees.

Tax authorities in Australia and the UK have already implemented real-time reporting of payroll information to ensure greater accuracy and compliance. With Revenue anticipating an extra €50 million in taxes in 2019 arising from the implementation of the new payroll system, it’s an indication of why employers should be preparing now.

Irish Tax Institute President Marie Bradley said: “Employers must be accurate in their reporting to avoid the imposition of penalties when mistakes are made. A penalty of €4,000 can apply to each instance where an employer fails to follow the instructions in Revenue’s new Payroll Notification system (RPN). This instruction enables the employer to calculate the tax correctly. Similarly, a €4,000 penalty can apply if an employer does not keep a register of employees at their business address. Our guide shows it’s not just important to be ready to use the technology but to have your employer records ready by 31 October.”

Ms. Bradley said “PAYE modernisation has implications for every aspect of the payroll process. It is vital that all employers review their payroll systems, to be confident that they can submit accurate reports to Revenue every pay date.”

Chief Executive of the Institute of Directors (IoD), Maura Quinn, said: “Companies’ tax governance frameworks may need to be reviewed and updated to take account of the sweeping changes to PAYE reporting”. “Directors of all companies, irrespective of size, will need to ensure company payroll processes and controls are sufficiently robust to satisfy the requirements of the new regime. Larger organisations with complex payrolls may need to implement a co-ordinated approach across multiple business units for example Finance, HR, Payroll, IT, business operations and their third-party service providers. This should minimise the risk of errors and potential tax exposures.”

Director of the Small Firms Association (SFA), Sven Spollen-Behrens, emphasised: “Small firms need to review their payroll processes to ensure all forms of pay can be identified and reported on a real-time basis. Pay is much broader than salary, for example it includes share-based pay, a company car, medical insurance paid for employees and other similar items. Accurate reports of mobile employees who are travelling in and out of Ireland will also be necessary, so that any PAYE due is deducted and reported at the right time.

Mr. Spollen-Behrens said: “Small businesses that do not use payroll software or an outsourced provider will be able to submit their reports to Revenue via ROS. However, this reporting facility won’t calculate the tax due. If they choose to use this option they need to be confident that their payroll calculations are correct.

Revenue has already commenced an extensive programme of engagement on the new payroll regime. It has hosted over free 100 seminars nationwide during September and October with most of the events held to date completely sold out. In addition to writing to all employers in Ireland, 50,000 employers have been contacted to ensure they are familiar with the new system and 11,000 of these received on-site visits.

Concluding, Ms. Bradley said “If you have any doubts please engage with Revenue, which has a dedicated helpline to support employers in the early days of the new regime.”

Article Published: 05/11/2018