The first RTR related deadline has already passed (submission of employee lists by 31 October 2018). Time is running out for organisations to prepare for the commencement of RTR. If your organisation is one of many that has not yet grasped the RTR nettle, the below, written by Doone O'Doherty, Tax Partner, People & Organisation, PwC and Jessicay Webbley, Senior Tax Manager, People & Organisation, PwC, summarises some key areas of focus for you now.
Data management will be an important part of preparing for RTR with data quality being crucial. This will include, for example, ensuring that all employments are properly and promptly registered with Revenue. Revenue’s request to all employers in Ireland to submit a complete and up to date list of current employees by 31 October demonstrates the importance to Revenue of data alignment. Data is the cornerstone and Achilles heel of RTR. Revenue’s very strong data analytic capabilities will stress test data quality and management within organisations, including completeness and timeliness.
Under RTR employers will be required to report pay, tax and other deductions, as well as details of employees leaving their organisations, on or before the date of payment to employees. If your organisation has weekly payrolls or more than one monthly payroll, a full and detailed submission to Revenue will be required on or before each and every payroll. Payroll software will need to be updated to support the generation and / or submission of this real time reporting to Revenue. Your payroll service provider (if outsourced) or payroll software provider (if in house) will be able to assist with necessary software updates.
But it’s not just about IT and system. It’s as much about a culture change. Revenue describes the proposed move as a "fundamental change ... for Revenue and employers". Revenue’s view is that there will be "significant business process change and change management exercise to be completed...for Revenue and employers alike".
Companies with globally mobile workforces need to pay particular heed. Mobile employees generate a significant amount of data for their employers. The onus is on the organisation to process and report the right tax deduction at the right time for the right employees and in the right location. This will bring particular challenges.
Similarly, any organisations delivering non-cash benefits or equity will need to review how and when this information gets into payroll and whether it will meet Revenue’s stringent expectations of appropriately robust business processes under real time reporting. For example, Revenue has been very clear that annual catch ups / adjustments of car BIKs would not be acceptable.
Revenue is keen to emphasise the potential benefits to employees. This includes the better use of credits and bands within the year, especially for people with multiple employments. The benefits for employers include less administration arising from the removal of year end reporting obligations. It may take time for these benefits to be fully recognised and appreciated by employees and employers. In the short term, however, the main beneficiary from RTR will be Revenue. Under RTR, Revenue will have significantly more, and more detailed, information from payroll reporting than at present. We know that Revenue is already planning to use this information for more detailed scrutiny on employee matters.
Payroll brings together so many different information types and sources, from personal employee details to salary reporting, as well as medical insurance and pensions etc. Due to its complexity, implementing RTR will require that many people in the organisation work together. The communication process will also be very important, among various internal employer stakeholders and with employees. Organisations will need to be fully aware of and collaborate with all stakeholders in their organisation’s employment tax universe, from the payroll manager, to HR to Finance to team leaders making decisions in relation to ad hoc benefits and working arrangements. If third parties are involved in the provision of taxable benefits reporting, another layer of challenging real time information and actions will need to be considered.
RTR will present a significant business process change and we urge businesses to start planning immediately, if they have not already started the on the road to getting real time ready.