RTI and the mystic it can hold for the SME Business Manager
Small and medium-sized businesses will be required to operate Real Time Information (RTI) from April 2013. It is very alarming to report that the vast majority of SMEs (96%) have a limited understanding or are unaware of Real Time Information (RTI), with the deadline fast approaching.
A DTE Business Advisers' survey of 126 SMEs has shown that 96% of companies or their clients had no knowledge of the changes, or those who do, had no idea of its implementation. Lynne Cramb, payroll director at DTE Business Advisers, said: “This is the largest change to payroll in 60 years and it seems to be going largely unnoticed at present.”
In the survey, 54% of respondents believed that RTI would mean up to 25% more work for their organisation, through obtaining the correct employee data, while 41% believed that an increased workload would be due to the change in procedures.
“It’s hoped that HMRC will give SMEs a period to ‘bed in’ the new system before it considers levying any fines,” said Cramb. esl is very aware of the implication for small and medium businesses from our discussions with our own clients in this very important sector of our business. We have put steps in place to demystify RTI and the confusion it has created. We have worked closely with the
Small and Medium Business Managers to break the RTI requirements into simple steps which relate to their individual businesses. We have created a schedule of activities and developed payroll routines that ensure RTI compliance with the least disruption to the normal business activity.
As an SME specialist we have created strong partnerships with accountants working with them to ensure their clients are RTI ready. We have set up seminars, webinars and training programmes specifically for our SME clients. These clients demonstrate the following business characteristics;
 have only one payroll
 do not have dedicated payroll professionals
 do not have multiple benefit providers
 do not have separate computer HR and Payroll systems
 prepare annual or quarterly payrolls
 do not have automated new joiner or leaver processes.

We have therefore provided guidance, in partnership with their accountants in many cases, on how they should prepare their data. We have helped them set up systems to effectively monitor new joiners and leavers. In addition our Account Managers have provided individual advice to ensure they are RTI compliant in terms of data and their payroll and Bacs systems.
We have also provided simple schedules regarding the data we require from them. Our research into RTI and its impact on SME‘s have highlighted certain areas;
All employers are required to provide HMRC with data with every time they pay an employee
– this will include cash advances used by the smallest employers unless all employees are paid below the lower earnings limit for NIC. A Full Payment Submission (FPS) may, therefore, be required more often than on a monthly basis (depending on the frequency of payments).
We have ensured our SME clients consider the type and regularity of any payments made to employees, such as salary advances. Some employers pay their employees an amount and pay the tax and NIC due to HMRC on time (i.e. by the 19th or 22nd following the end of the tax month but their agent calculates this tax and NIC after the employee has received payment). This process needs to be amended under RTI because an FPS including the details of the tax and NIC must be submitted when or before the payment is made to the employee – not on or before payment of tax to HMRC.
This equally applies to company directors. The company needs to determine the nature of any payments to a director before payment to determine whether RTI should be operated.
Carers, nannies and domestic staff
Although payments by employers to carers to provide services to a disabled or elderly person in their home are not included in RTI, payments to nannies and other domestic employees are included in RTI.
Quarterly payments of tax and NIC due under PAYE
Companies who make quarterly PAYE payments may need to change their procedures.
Although the tax and NIC due will continue to be paid on a quarterly basis, the FPS submissions will be required whenever payment is made to the employee i.e. monthly, weekly or more frequently. Such employers should ensure they are prepared for this additional administrative burden.
SME’s do face a steep learning curve however with support from their accountant and payroll provider the mystic of RTI should be removed. esl is confident that our SME clients have the support and resources to successfully meet the challenge of RTI next month