The move to real-time reporting is the most significant change to the PAYE system since its introduction more than fifty years ago. The modernisation programme will bring improved accuracy and transparency for all stakeholders, including employers, employees and Revenue, while also significantly streamlining the entire administration process. To that end, the introduction of PAYE Modernisation by Revenue is both much needed and very welcome.
Since October 2016, when the project was launched, Revenue has worked extensively with all relevant stakeholders in a co-design approach, to ensure the new PAYE Modernisation reporting system reduces the administrative burden on employers to the greatest extent possible. For example, one of Revenue’s key design principles is that employer reporting should be seamlessly integrated into the business’ payroll process. This will minimise the administrative burden on employers and allow their reporting obligations to Revenue to become a by-product of their payroll operation. In addition, the project will lead to the abolition of the current employer reporting obligations via P30, P35, P45, P46 and P60 forms. Revenue has advised me that employers have welcomed the abolition of these forms and the consequential reduction in the administrative burden.
All employers are currently obliged to calculate and make the correct statutory deductions from their employees’ salary payments each time they pay. A significant number of employers, including small and medium employers, use payroll software to run their payroll and that will still be the case when PAYE Modernisation goes live on 1 January 2019. I am aware that Revenue has engaged extensively with the payroll software industry to ensure, as far as possible, that the necessary changes to their systems will be ready on time. Consequently, the processes for these employers before and after 1 January 2019 will be broadly similar.
For employers who do not use payroll software, Revenue is providing an easy-to-use process within the Revenue Online Service (ROS) to capture payroll data for each employee. The process includes data screens that the employer will be obliged to complete for each employee every time a pay-run is completed (normally weekly, fortnightly or monthly). The burden associated with this work will be offset to an extent by the abolition of the previously mentioned forms that operate under the current system. It is also very important to note that there is no change to current PAYE payment dates under the Modernisation programme.
I know that Revenue is very conscious that some employers may experience difficulties in the early phases of PAYE Modernisation and has assured me that it will make every effort to assist where required. For example, the Revenue Employer Helpdesk will have significant additional resources available to it to meet customer demand and officials will be available to visit employers should the need arise. Revenue has also assured me that it is not the intention to impose sanctions such as interest and penalties during the early transitional months where employers do their best to comply. However, Revenue always reserves the right to impose sanctions where there is clear non-engagement with the law.
Finally, while it is a matter for each employer to consider the impact that PAYE Modernisation will have on payroll arrangements and to put steps in place to ensure compliance with the new requirements, I would strongly encourage that they pro-actively engage with the changeover. I would particularly recommend that they review the very detailed PAYE Modernisation material that is available on the Revenue website at www.revenue.ie/pmod174 and that they contact the Revenue Employer Helpdesk at telephone number 01-7383638 if they have any queries or require any clarifications. I would also recommend that employers consult their payroll software providers as a priority to ensure the payroll systems are compatible with the requirements for PAYE Modernisation.