Understanding which aspects of PAYE Modernisation Revenue officials will be scrutinising when the new regime goes live in January will be essential for all payroll departments across Ireland.
Undoubtedly, three of the main areas of focus will be the issuing of PPS numbers, application of up-to-date tax certs, and allocation of Employment IDs. Anyone not paying attention to these could incur some serious ramifications– likely in the form of audits and red letters initially but then ultimately fines.
If payroll departments want to avoid any major headaches they will want to keep all employee details related to this up-to-date. But it’s also a good idea to know why Revenue will be keeping such a keen eye on these areas.
There are several reasons why Revenue would take an interest in PPS numbers so make sure all contracted employees are registered with the Department of Employment Affairs and Social Protection. Not least because it identifies them as a PAYE employee to Revenue.
The PPS number also allows Revenue to track an employee’s movements and makes sure that all liabilities and allowances are properly applied to their latest employment contract. In the past, some employers may have been a little lax at keeping tax cert information up-to-date – some may have done this just twice a year. But that will no longer be acceptable.
With the enhancement of the ‘myAccount’ government portal,employees will be empowered to check and accurately manage their own tax liability online in real-time. And applying the wrong code will inevitably lead to queries – especially if an employee believes they are paying more tax than is necessary.
In addition to PPS numbers, Payroll departments will need to ensure that all employees are issued with Employment ID numbers. This is particularly significant when an employee has more than one contract of employment – which is more common than you might think. Imagine, for instance,a warehouse operative who works as a security guard at the weekend. The employee may have two records on the payroll system, one for each contract of employment, and you should allocate a separate unique employment ID to each record.
The Employment ID numbers will allow Revenue to clearly identify unique contracts of employment. This will also help employees to manage their tax liabilities through the ‘myAccount’ portal – they will be able to maximise their possible gains by spreading tax cut-offs and credits across the different contracts of employment.
If an individual happens to have two contracts of employment with your organisation, you could inform them this is the case and advise them how to go about doing this.
It’s important that each employee has the most up-to-date tax cert details, issued by Revenue, applied to his or her payroll record. Employers should check on their payroll system to ensure that each employee record contains a tax cert dated in the current tax year. Revenue needs the most up-to-date records to ensure that the employee is being taxed in accordance with Revenue instruction. This could be to the benefit of the employee if they have had an increase in tax credit.
To prepare for the changes before the new regime goes live,organisations may need to engage in a process of employee data cleansing to ensure all details are accurate. This will include checking such things as date of birth, addresses, start dates, PPS numbers and tax cert details.
Leaving these fields empty when submitting remittance data will create problems. If the updated ‘My Account' portal is to work effectively then full transparency will be the order of the day, and this may expose any errors, miscalculations or inaccuracies in the payroll process. Revenue may allow a grace period where some errors exist – after all it can take up to three months to get a PPS number for workers who arrive from another country. But if all data fields are not fully complete and accurate after this period, you should expect a phone call from Revenue, followed by red letters and eventually fines.
Worse still, employers could also find they are held responsible for the tax burden left behind by an employee moving to another organisation before their full tax liability is met. With this being the case, it will be best to get up to speed quickly and check that you’re fully compliant.