Micro employers struggling with RTI payroll reporting

MICRO EMPLOYERS are finding payroll reporting Real Time Information (RTI) challenging, a study by HMRC has found.

HMRC found that PAYE management was not integrated into the payroll process and that many respondents did not see it as a coherent end-to-end process.

A lack of understanding of how PAYE real time reporting obligations should be managed was a main source of micro-employer error.

“Reporting PAYE is often treated separately from the core function of running the payroll, and tied to the (often less frequent) rhythm of paying HMRC and the related tax month deadlines,” HMRC said.

Examples of good practice were found to exist, typically when ‘running the payroll’ and all associated tasks are strictly managed and RTI reporting duties are integrated into the payroll process.

Micro-employers’ and agents’ misunderstanding of RTI reporting was also exacerbated by their own behaviours (lack of checks and low prioritisation), which also contribute to error in RTI submissions.

Conducted through 45 qualitative interviews in 2016 with micro-employers and their agents, the research involved only those who were known to have received a PAYE late filing penalty from HMRC, and those who had made an amendment after the end of the tax year by submitting an Earlier Year Update (EYU).