Email a collegue.| Headline: | PAYE e-filing deadline shakes up payroll industry |
| Description: | The transition to online filing is stimulating a lot of software sales and encouraging companies to consider outsourcing options, payroll managers, software developers and payroll intermediaries.
Kate Upcraft, Policy & Research Manager at the Institute of Payroll and Pensions Management says are being put under pressure by the deadlines. Upcraft runs an advice line for institute members and commented that the level of PAYE online-filing queries has been climbing steadily in recent months. "Online filing is our top query at the moment," she told AccountingWEB. "Everything has been thrown into the melting pot. A lot of people had to consider whether their current payroll systems could cope. The deadline has focused their minds on how much it's going to cost to comply and whether to turn to an intermediary." Payroll and benefits can use up a great deal of company time and effort. With the move to online, many companies are questioning how they carry out these tasks. "People are going back to basics to see how much payroll processing is costing them. If they outsourced, has it stacked up? If not, with the efficiency cost savings and incentives available with online-filing, they are considering bringing it back in-house." Many people have their heads in the sand and make the assumption that other people will do it for them. "Just because you are using a bureau to process your payroll don't assume online filing will not affect you," she warned. For example, unless they have appointed a bureau to handle remittances as well as the payroll processing, many employers will find that they have to file the P35 return, which is their declaration of the sums owed and paid to the Revenue after reconciling their payroll accounts for the year. Many are assuming this can still be sent on paper but it must also be filed online in order to avoid the penalty. The "250 Club" affected by this May's deadline includes many large organisations who look at their payroll from a wider HR perspective and take a more strategic approach to the issues. However, some may find that the implementation costs are too high to meet the May deadline and opt to take the £3,000 hit of non-compliance penalty, Upcraft predicted. "I think there will be more activity in the intermediary market when the 50-250 employee schemes have to file online next year. A lot of them may decide they can't be fussed with the transition and it’s time to hand it all over to an intermediary" While bigger employers have to make the switch this year, tax-free cash incentives are currently available for smaller companies who migrate early - up to £825 for companies with fewer than 50 employees who do so this year. The outsourcing debate Payroll lies at the heart of the outsourcing debate - as many practicing accountants who operate payroll bureaux will tell you, it is precisely this sort of non-core activity that you should consider parcelling out to a specialist who can carry it out more efficiently for you. It sounds like good business logic, but as Upcraft's warning about P35s illustrates, there can be hidden catches for the unwary. Regular horror stories such as the supply chain debacle at Sainsbury's and reports of troublesome transitions have kept the in-house/outsource debate rumbling for ages. If it is going to work for you, you need to know exactly what you want and how much it is going to cost to process each payslip - bearing in mind any additional charges for corrections, management reports and even stationery. All of these will need to be set out in a Service Level Agreement. Aside from costs, management control is another area for debate. If your accounting system links to the payroll module, the outputs can be pulled through for financial reporting too. Of course, many bureaux may be able to link to your finance systems too, but you will need manage the security issues and be aware of extra costs involved. |
| Date: | 18.01.2005 |
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