SAP Payroll Real Time Information - RTI

Significant changes to the way payment details are communicated to HMRC

Real Time Information (RTI) is a priority government program aimed at improving the operation of PAYE. It will make the system better for individuals and easier for employers and HM Revenue & Customs (HMRC) to operate.

The current system has been in existence since 1948 so the changes proposed are very radical and mean a restructure of how all payments and deductions (i.e. Tax, National Insurance (NI), Sick Pay etc.) are reported to HMRC.

Under the new system, all employers will have to report employee tax and NI details along with other information, to HMRC on a pay period by pay period basis, instead of just once a year at the end of the tax year. The Year End process will become simpler as it is likely that only employee P60s will need to be processed.

The data reported each pay period will include statutory payment / deduction data and data relating to Starters and Leavers in a single file. This means that the current In Year Movements (IYMV) process will no longer be required.

The channel for transmission and reporting of this data will be via BACS and the new file format will contain both the net pay data for making the deposits into employee's bank accounts, together with the statutory data for HMRC. The BACS communication will be two-way, with the Acceptance/Rejection reports coming back to the employers through BACS.

The new RTI systems will:

• make the PAYE process simpler for employers and HMRC
• enable HMRC to deal with late payments more effectively
• support the payment of Universal Credits
• make PAYE more accurate for individuals, reducing the number of bills and repayments sent after the end of the tax year
• reduce Tax Credits error and fraud

Interim Solution

In response to concerns from the software and banking industries about the timescales for developing the ISO standards for use in the BACS channel, HMRC will also accept RTI data through Electronic Data Interchange (EDI) until at least April 2014 in addition to the internet channel.

In April 2013 there will be two methods of reporting:

• Internet through the Government Gateway.
• Electronic Data Interchange (EDI). EDI for RTI will be available until at least 2014.

Future BACS Solution

BACS is the HMRC’s strategic solution for RTI reporting and they are actively working with the banking and software industries to develop a service which will enable RTI reporting through BACS. This would enable employers who pay their employees through BACS to report RTI automatically at the time electronic payments are made to their employees.

Why BACS?

• 90%+ employees paid via BACS
• Links & corroborates payment & associated information
• Validates payment & linked data
• Single channel for payment instructions & PAYE information

Timescales

HMRC will pilot the RTI service, with volunteer software developers and employers for a year, starting in April 2012. Any adjustments identified during testing will be made in Autumn 2012.

Employers and pension providers must use the RTI service from April 2013. All employers will be using the RTI service by October 2013.

The SAP Solution

SAPs proposed solution will deliver a new program based on the EOY report to support Tax reference based submission. This will enable the submission of an XML file via the government gateway. PI will be used for people on ECC6.0 and above. For system versions ECC5.0 and below, Business Connector will be used.

Additional Information

We will regularly update this page with more information as it becomes available but the following links may also be useful:-

http://www.hmrc.gov.uk/rti/employerfaqs.htm

http://www.hmrc.gov.uk/rti/news/30June2011-employers.htm

http://www.hmrc.gov.uk/softwaredevelopers/rti/improving-rti.htm

http://www.hmrc.gov.uk/softwaredevelopers/rti/internet-rti.htm

http://www.hmrc.gov.uk/softwaredevelopers/rti/index.htm

Sushilkumar.M