What’s new for PAYE Modernisation in 2020 (Sponsored)

Jan 30, 2020

A small change with large consequences

Revenue have made a small change to the data that is submitted by employers in 2020 by adding a new field called ‘Pay Period’.

With the addition of this new data item, Revenue will know what bands and credits have been allocated by the employer to each individual payroll entry. They will now be in a position to perform their own calculations for PAYE and USC and compare them to the amounts which have been reported by the employer. Don’t be surprised if Revenue start performing balancing calculations for employees at some point in 2020.

This new data item is also going to highlight cases where an employer’s payroll calendar is not aligned to the Revenue calendar. From a Revenue perspective, week 1 applies to any payment that is made between the 1 and 7 January, week 2 runs from 8 to 14 January, and so on.

If an employer makes a submission to Revenue that reports a pay period of 1 and a payment date of 10 January, it is likely that Revenue is going to follow this up with the employer, requiring them to correct their submissions. These corrections are likely to be very difficult to perform, so the best course of action for employers is to align their calendars as soon as possible.

2019 RPNs are no longer available

You may have already noticed that 2019 Revenue Payroll Notifications (RPNs) are not available through your Payroll Software nor on the Revenue website. This is new Revenue policy. Employer who find themselves in the situation of having to make 2019 submissions for an employee that was not registered in 2019 will have no other option but to “gross up” any 2019 payments when they report them to Revenue.

From Revenue’s perspective, if they don’t take a hard line now on new policies, then employers will not change their ways. Payments to employees must be reported “on or before” the date on which the employee is paid, so don’t be late.

The Revenue Data Risks and Oversight team

In 2019, Revenue had a small Data Quality team based in Tallaght that was tasked with inspecting employer submissions and highlighting any data quality issues.

The main purpose of this team was to help employers get to grips with PAYE Modernisation and ensure that payroll processes were in line with the regulations. This help involved site visits by Revenue officials and often resulted in employers having to make corrective submissions.

Revenue have now formalised this process with the establishment of the Data Risks and Oversight team which will be rolled out to all tax districts. Because of this, we are going to see ‘less carrot and more stick’ in respect of employer’s compliance with PAYE Modernisation regulations.

What can payroll software do for you?

Payroll software is responsible for the reporting 99% of the 70 million line items that were submitted to Revenue in 2019. It provides an effective filter to help ensure that employers are complying with their obligations under the regulations.

However, the old adage of “garbage in, garbage out” applies, and the ability of payroll software to filter such large numbers of submissions is limited by the fact that it relies on the user to actually enter the correct data.

If you run your week 1 payroll and enter a payment date of 7 January in the software but actually pay your employees on 8 January, then you are going to have a problem, and it is likely that by the time the problem is discovered, it will not be easy to rectify. With such problems, your payroll software provider may not be able to help you and you may need to make large scale corrections manually on the Revenue system.

If you are in the situation where your payroll calendar is not in sync with Revenue’s it’s time to act. Contact your software supplier and see what you can do to avoid bigger problems down the line.

CollSoft Payroll is designed to help you comply with the Revenue regulations. If you would like to see how CollSoft can help you, please visit our website at www.collsoft.ie or call us on (046) 905 0800.

(This article is sponsored by CollSoft Payroll.)