30th March 2018
PAYE Modernisation comes into effect from 1st January 2019, however if you are an employer it is important at this stage that you are informed of the change. What you need to know depends on whether we prepare your payroll on your behalf, of if you prepare your own payroll:
Royal Canal FCS Payroll Bureau: Where we prepare your payroll on your behalf, you will not be impacted directly by the change, however please be aware that Revenue will run a number of postal employer information campaigns throughout 2018 and we have prepared this article to give you comfort that everything is in hand.
Please note it is the employer’s responsibility under PAYE Modernisation to ensure compliance. This compliance includes processing the payroll and submitting the pay details to Revenue as part of each pay run. If employees are paid prior to running the payroll this will be a non-compliance event subject to penalties from Revenue.
In-House Payroll Service: If you prepare your own payroll, there are some preparatory steps in 2018 that you need to be aware of. From 1st January 2019 you will need to ensure you are compliant with PAYE Modernisation – please read on for further details.
Disclaimer: This information is provided as a general guide based on the current information provided by Revenue. As Revenue are still finalising some of the finer details, this information is subject to change and you are encouraged to check back to this page at a later stage for any updates.
STEP BY STEP GUIDE TO PAYE MODERNISATION
PAYE Modernisation represents real-time reporting of each payroll processed to Revenue. This will allow Revenue deal with employee tax issues more efficiently.
- April 2018: Revenue’s first stage postal campaign to employers will begin. All employers will receive a letter from Revenue outlining what PAYE Modernisation is all about. In summary, PAYE Modernisation means Revenue will hold real-time payslip details for all employees, facilitated by employers uploading an electronic submission to Revenue, after each pay run, with details similar to the current annual P35 return. We expect that the correspondence from Revenue will outline what employers need to be doing to ensure their data is ready for PAYE modernisation (see below for further details).
- Are My Payroll Processes PAYE Modernisation Ready?: The good news is that your payroll program will look after the electronic communication to Revenue with each pay run, if you are running your own payroll you just need to ensure you complete the steps to allow your payroll program communicate with Revenue. You will need to link your payroll program to your Revenue Online Services (ROS) digital certificate. If you do not have a ROS digital certificate you should apply to Revenue for access. Failure to comply with PAYE Modernisation will result in penalties being applied (a grace period for the first 6 weeks of 2019 is expected in order to allow everybody get used to the new processes).
- Is my payroll data PAYE Modernisation Ready: The payroll data is based on what a user inputs into the payroll program. The reason for Revenue’s PAYE Modernisation Project, and what employers need to do to prepare can be explained as one: The problem Revenue face is that there are currently break-downs in the operation of the PAYE system. For example, a situation where Revenue have issued a tax credit certificate for an employee, but for whatever reason the employer fails to use this tax credit certificate in the preparation of the payroll. The employee is left on emergency tax in error, and decides to ring Revenue to query why they are paying too much tax. Revenue check their system and see that the employee’s full tax credits are issued to the employer. Revenue do not have a copy of the employee’s payslip (or real time data) to fully understand what happened. So to prepare for PAYE Modernisation employers throughout 2018 should ensure that:
- They have entered the correct PPS number against each employee on the payroll
- They have applied for/received back a tax credit certificate for all employees
- They have issued a P45 for all employees that have left their employment
- May 2018: Revenue will begin Customer Service visits to ensure that employers are ready for PAYE Modernisation. It is important to understand that this is not an audit/inspection and will most likely only involve a discussion about the topic.
- June 2018: A data alignment return will have to be submitted to Revenue. In preparation for both your payroll data, and Revenue’s records being in sync (i.e. having the same list of active employees) Revenue will complete the following steps:
- Prior to June 2018 they will compare the P35s for 2017 for employees that were not registered employees per Revenue records. If the employer has not since registered the employment (or presumably registered a P45), then Revenue will automatically issue a tax credit certificate.
- In June 2018 Revenue will seek a data alignment return detailing the current list of employees so they can be cross-checked to their records.
- Autumn 2018: Another postal campaign aimed at employers is expected from Revenue.
- January/February 2019: You should issue the 2018 P60s, file your December 2018 P30 and P35 2018 as normal. Your first payroll in 2019 is run as part of PAYE Modernisation.
What Else Is Different?
- Employees: Employees are encouraged to register for Revenue’s MyAccount service as they will see realtime data of their pay and tax. They will also be able to download a Year-End Statement. This statement replaces the P60 system and will be accepted by banks/grant authorities etc. It is expected that Revenue will prepare an reconciliation of employee taxes at year-end and automatically issue refunds.
- Employer Returns: P Forms will cease to exist (P60s/P45/P35/P30).
- Revenue Payroll Notification (RPN): This is the new name for a P2C file/tax credit certificate. It will be downloaded by the payroll program directly from Revenue Online Services.
- Payroll Submission: This is the information that is sent to Revenue at the end of each pay run.
- Revenue’s Monthly Statement: A statement from Revenue detailing your monthly payroll summary and the total payroll taxes owed to Revenue.
Should you have any queries please do not hesitate to contact Ronan Duffy at our office.