200,000 employers across Ireland have to get ready for the biggest change in Revenue's payroll reporting and compliance regime in almost 60 years.
A new real-time system known as "PAYE Modernisation" is going live on January 1, 2019. The first deadline in the process is just days away - October 31. To this end the Irish Tax Institute, the Small Firms Association and the Institute of Directors are launching a guide to help employers.
President of the Irish Tax Institute, Marie Bradley, said the new system is a very significant change for employers. She explained that employers are familiar with forms known as P30s, P35s and P45s, but all those forms are going to become a thing of the past.
"What's going to happen is that employers will have a real-time reporting obligation whereby they will report to Revenue on a real-time basis what pay and deductions were made when they were paying employees," Ms Bradley said. "So it's going to be real-time and that's very different from the system that's going to be in place."
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She said the new system will be easy to use. "If people use payroll software providers, the system will be very much automated because the payroll software providers have been working closely with Revenue over the last while and their systems will be very much working so that they can get the tax credits that they need to operate payroll etc. All of that will be available through the payroll providers to the people who are using the payroll system. They can use that information to process the payroll, and then once the payroll is processed, it will report automatically to Revenue."
The Irish Tax Institute says it is time for small businesses to ask if they should get payroll software. If they don't have payroll software then, they can go onto ROS, the Revenue online system, and report payments and deductions through that system. They will also be able to get the certificate of tax credits. ROS will not compute the deductions that need to be taken from the salary so companies will still have to compute that themselves.
One deadline is imminent - October 31. All employers need to provide Revenue with a list of their employees. It is a reporting requirement which must be complied with and it can be done on ROS.
"If employers go on to ROS, and they download the form, it'll request details of employees' PPS numbers and their name etc," Ms Bradley said. "The list needs to be an accurate list - It needs to be a list of current employees".
Some employers may have some employees on the system who are no longer with them, so it may be necessary to issue a P45 in those cases, she added.
"It's also a good opportunity for employers to ask themselves are they using the correct tax credit system - what's known as the P2C. Do they have the correct P2C and record? It is a really good opportunity for employers to look at their employee list, clean it up and advise Revenue who their current employers are by October 31," Ms Bradley said.
All employers have been advised of the change to Revenue's payroll reporting and compliance regime, but the take up has been quite disappointing. There is over one week for employers to engage and get those employees uploaded onto the ROS system. "If they don't engage by the end of this month, Revenue will be aware of who has engaged and who hasn't engaged and they'll be making contact with them," she said.
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