Sweeping changes to the way in which farmers collect and report payroll information will come into effect on 1 January 2019. Gone are the old familiar forms like P35s, P45s and P60s. In the future, employers will have to submit information ahead of each pay day and Revenue will be able to see details of each employee’s pay and tax deductions in real-time. Farmers will need to provide accurate information for each pay period as there will no longer be an option to correct errors on the P35 at the end of the year.
What is changing?
Under the new system, a Revenue Payroll Notification (RPN) will replace P2C. You will have to provide details of each employee’s pay and tax deductions to Revenue on or before every pay date. Bonuses, shares, commission and benefits-in-kind need to be included. From January, benefits-in-kind such as a company car will need to be spread over the year and taxed in each pay period. This will affect how you collect and record each employee’s mileage.
At the end of each month, Revenue will provide a statement summarising the information that you have provided. You will be able to view this statement on the Revenue Online Service (ROS) from the fifth day of the month and you will have until the fourteenth day of the month to check and correct your reports for the previous month.
Employees starting their first job will have to register on Revenue’s ‘MyAccount’ service, a single access point for secure online access to individual tax payer services including PAYE, Local Property Tax, the Home Renovation Incentive and various other reliefs and incentives.
Directors
Directors will need to ensure that the company’s tax systems and processes are up to date and that all personnel involved in the payroll process are aware of their responsibilities. Real-time reporting is likely to reveal any weaknesses in your systems and processes, so it will be important discover and address these before the new system becomes operational. Revenue is issuing guidance for proprietary directors. If you are a director and receive this document, it is important to read it and comply with the information provided.
Making payments
There is no change to the way employers make payments to Revenue. So, if you currently pay on a monthly or quarterly basis this will continue under the new regime. However, while the payment due date will remain the same, quarterly and annual remitters will now have a monthly statement issued by Revenue which will become their monthly return. As previously mentioned, it will be very important to provide accurate information for each pay period as in future you will not be able to correct errors on the P35 at the end of the year.
Penalties
It is worth noting that real time reporting will give Revenue greater oversight of your processes and discrepancies will show up very quickly. Now is the time to identify and address any weaknesses in your system and put the correct procedures and processes in place going forward. Failure to comply with the requirements of new PAYE regime is likely to result in Revenue intervention or Revenue Audit which could lead to fines or penalties.
Note that if you do not have a Register of Employees at your business address, you could be liable for a penalty of €4,000. A similar penalty could apply each time you fail to follow an RPN or if you do not inform Revenue when an employee leaves your employment. In addition, if you do not pay the correct tax due, you could be liable for interest on the underpayment at a rate of 10 percent per annum.
Next Steps
For employers who are currently running manual payrolls, the new system will involve additional administration and there is likely to be increased scope for error. For this reason, now might be a good time to either look at getting payroll software or, alternatively to outsource your payroll to a payroll service provider who will have technology in place that integrates with Revenue and reduces the chance of errors.
If you already use payroll software, check that your software provider is ready for the new PAYE regime and has run the Revenue Public Interface Test. You should also ask whether there will be any additional charges due to the regime and what supports they will be providing for you when real-time reporting comes into operation on 1 January 2019.
Conclusion
The sweeping changes coming into effect in the New Year will see the abolition of familiar forms like P30s, P45s, P60s and end of year returns. In future, it will be more important than ever to maintain reliable information on all employee payments and taxable benefits so that you can make accurate returns to Revenue. Keep in mind that data submitted to Revenue will be fed into risk analysis systems which could potentially identify weaknesses in your procedures and lead to Revenue interventions, fines or penalties.
At this time of the year farmers will be meeting their accountants to discuss their tax and plan for 2019. This is an opportunity to seek advice on any PAYE changes that may be needed to get ready for the new regime.
31 October 2018 - Deadline to submit your list of employees to Revenue.
1 January 2019 - PAYE real-time reporting comes into operation. All employers must operate the new PAYE regime from this date.
5th of every month - Summary of your payroll reports for the previous month will be available on ROS.
14th of every month - Deadline to check and correct your reports for the prior month.