Keeping with the Times

PAYE Modernisation marks the biggest change in the PAYE system since its introduction in 1960, writes Mairéad Divilly, Partner - Outsourcing, Payroll and Compliance at Mazars.

The world has changed significantly in this time, historically it was common for people to have a job for life and payroll was a highly manual process. In today’s modern era, changes in employment and multiple employments are the norm. Advances in technology have allowed for huge improvements in the amount and the speed of information available. The PAYE system as it stands is at odds with this new way of working.

From January 1st 2019 employers will be required to calculate and report their employees’ tax deductions in real time, dramatically changing the flow of information to and from Revenue. This will enable Revenue to ensure that employees are getting all the allowances they are entitled to, and paying the right amount of Income tax, PRSI, USC and LPT at the right time. It will also ensure that Revenue will have the most up to date pay and tax deduction information to use for compliance and risk analysis which will allow for ‘in year’ interventions.

Employees will have online access to the payroll information submitted to Revenue by their employer for each pay period which will allow for greater transparency. Within Paye Anytime, the Jobs and Pension Services section will allow employees to allocate their tax credits between various employments enabling them to maximise the use of their entitlements.

PAYE modernisation will see the P2C being replaced by a Revenue payroll notification and the requirement for P30’s, P45’s, P46’s, P60’s and end of year returns will be removed and replaced by a Revenue Payroll Submission which must be returned to Revenue each time a payroll is completed. The Payroll submission will contain all relevant data relating to each employee for that pay period including start and leave dates, payments and taxes. Revenue will produce a monthly statement showing the total tax due based on all submissions in the month.

Employers need to be fully aware of their responsibilities and should now review their business processes to ensure that they are in a position to meet the new requirements. Many employers currently place too much focus on end of year reporting with a “tidy up exercise” completed before processing the year end return. The areas of BIK and Expat employees need to be given particular attention as under the new reporting requirements these practices will be highly visible to Revenue and non-compliance will not be acceptable.  Revenue have advised that fines and penalties will apply to employers who fail to operate PAYE correctly and employers may also be liable to pay taxes which should have been withheld on a grossed-up basis.

How can Mazars assist?

Mazars provides a first-class bureau service run by a team of fully IPASS trained payroll professionals, using the latest software and taking a proactive view of client needs.

We provide flexible cost-effective solutions from our Irish offices for both Irish and International payroll with the client having a  one point of contact and one stop shop for all their payroll requirements across the world. This ensures greater compliance for businesses and enables client staff to concentrate on the core business activities of their organisations. Continuity of service is a key aspect of our payroll outsourcing offering, something which will become critical to organisations given the more frequent deadlines for statutory returns under the new PAYE modernisation regime. Mazars also advise in relation to benefits in kind, share schemes, redundancy, termination payments and payroll tax audits as well as providing audit of clients payroll processes.

This article first appeared in Better Business magazine July 2018.