Large numbers of SMEs yet to prepare for payroll shake-up
Large numbers of smaller firms have admitted they are not prepared for changes in how payroll systems interact with Revenue that are due to come into force in January.
An overhaul of the Pay As You Earn (PAYE) system is due to come into effect in five months.
But 40pc of firms are not prepared for the changes, according to a survey of 200 firms which was commissioned by Big Red Cloud, a firm that supplies payroll software.
A majority of the firms surveyed said they were short of detail on how the new PAYE system will work.
From January, the new system will see employers submitting payroll data on a regular basis.
This represents a fundamental shift from the present system where detailed payroll data is submitted annually in a P35 form.
Big Red Cloud said Revenue’s changes are warranted, given the fact that the existing PAYE system had been introduced in 1960, at a time when a job was typically for life and payroll was a manual process.
Every aspect of how an employer fulfils their PAYE reporting obligations will change to a real-time electronic submission of the data.
Big Red Cloud said that covers everything from commencing employment, statutory deductions (PAYE/PRSI/USC), as well as the cessation of employment.
Well-known forms, such as the P45, P46, P30, P60 and P35, will disappear.
The survey found that 66pc of small and medium-sized firms are “short on detail” on the PAYE system overhaul.
Just 5pc are “completely unaware” of the changes.
But 40pc of SMEs said they are “not prepared at all” for the January 1 modernisation deadline.
And just 15pc say they are confident they will be ready.
Big Red Cloud CEO Marc O’Dwyer said the Revenue changes represent a huge overhaul of the PAYE system, the first in 58 years.
“As the year progresses, it is becoming increasingly apparent to us that, not only are many businesses not ready, many are simply unaware and/or uninformed of the changes and what they will mean for their business,” he said.
He added it was important that owner/managers take the necessary steps over the next few months to ensure their business is Revenue-compliant by January.
Revenue Commissioners chairman Niall Cody said recently the modernising of the system and move to real-time PAYE “represents an important step in the process of continuous improvement in service, compliance and efficiency in our administration of the tax system”.
He said that improvements and efficiencies will be the end-goal but “businesses, particularly those at the smaller end of the scale, will need some help to get there