Saturday, November 28, 2020

‘Real time’ is unrealistic on farm

June 6, 2013 by  
Filed under Fen Tiger

New pay rules coming into force this spring are a headache on many farms, says Fen Tiger.

Does anyone remember the old paper wage packets? They were pocket-sized pay packets with details of weekly tax, national insurance and – if you were lucky enough to add a few hours overtime – your total take-home pay.

More crucial was the fact that cash was received and your weekend beer money was ready to hand. Well, from 6 April this year, employers will have to start reporting PAYE information to HMRC in “real time” – also known as RTI. And it is proving to be a headache.

One of my very first jobs on the farm was to pay the weekly wage. Using P11 deduction sheets and various tax tables, I quickly learned that to rush these calculations would result in a lengthy process of recalculation which meant I took my time to ensure they were correct.

After all, an error in the cash could add to the weekly wage packet. Over the years, the system progressed to BACS payments which work well to this day – even with hand-written calculations. Yet the writing is now on the wall  for this workable system.

Being against using any outside help to pay the wages, I have now reluctantly employed the services of my local accountant to operate the RTI system.

With only three employees, it takes me 15-20 minutes per month but with computer software involved and for £22.50 per month I am passing the problem on. I do not want to purchase payroll software and I do not want to purchase a new computer that would cost me more than £500.

Neither do I want to register online. Nor do I want a user ID or password, which are bound to get lost. Currently, any tax code changes are sent by post but even these will be sent online. So if I update my computer, certain other information will have to be made available.

The number of hours worked and details of part-time workers will also have to be recorded – even if they earn below the lower earnings limit. Even those paid only once a year. You must also record unpaid leave and also inform of any starters and leavers using a special system.

In the RTI world, everything must be exact and correct – including names and dates. No nicknames or guestimates are allowed – even though one of my casual employees, known as Lofty, doesn’t know his exact date of birth. He must be the only person after the queen to have two birthdays!

If you pay by bacs directly into a bank account you must check that your payroll software includes the RTI cross reference. This is needed so HMRC can match the payments employees receive with the payroll data that is reported in real time.

Each employee must have a unique reference – you need to report your payroll information on or before you pay someone. If your information is incorrect,  it may cause problems for HMRC, you or the employee!

In short, it’s a nightmare. There is going to be plenty of information available to suit all tastes but who is going to gain? Certainly not me. Instead, it is going to cause an administrative nightmare on many farms with HMRC benefitting the most.

My trusted method for paying the wages – which works for smaller employers like me up and down the land – will no longer work. The HMRC will no longer send me paper P11s or tax tables. By taking away this method, the government is piling costs on to my business.

I currently send all information at year end rather than monthly as the government is now demanding. In doing so, the government is increasing my workload 12-fold. I can understand HMRC wanting to snare the tax dodgers, but the few spoil are spoiling it for the rest.

No-one has mentioned my cheque payments but I suspect that old tradition will soon go alongside the old paper pay packet. Now I must go and claim back my VAT for the month – so long as the website is available and I can get an internet signal…