Ifac, the farming, food and agribusiness professional services firm, is reminding Carlow farm businesses to ensure they are fully compliant with Revenue’s employer requirements under the new PAYE Modernisation regime to avoid any unnecessary breaches and subsequent fines in 2020.
On the 1st of January 2019 PAYE Modernisation was introduced – the biggest change to happen to the Irish PAYE system since the 1960s.
This included the following for employers:
Real Time Reporting (RTR) - every time an employee receives a payment Revenue is now informed on or before the day of payment
Revenue Payroll Notification (RPN) and a Payroll Submission Request (PSR) was introduced replacing the “P” forms, e.g. P45 and P35
Before calculating payroll (regardless of frequency), an employer is now obliged to request an RPN (if an out of date RPN is used the employer could face a fine)
Employers are obliged to notify revenue via a Payroll Submission Request (PSR) of payments made to employees on or before payday (again any delays could result in fines)
The Variable Direct Debit was introduced whereby Revenue obtained ‘permission to request the value of your actual monthly liability’ from the employer’s bank account, usually three days before the end of the month
Additionally, the Collector General automated their systems and were able to identify delays related to the payment of PAYE/PRSI/USC by employers (this meant many received final demand letters for the first time ever).
Furthermore, while Revenue spent much of 2019 assisting employers with the new regime, ifac believes that in 2020 it will turn its attention to compliance.
Pat Comerford, partner at Ifac's Carlow office said: "In the year ahead we expect to see breaches being addressed promptly leading to more fines and an increase in Revenue Audits.
"Simply by failing to have an up to date Tax Certificate/Revenue Payroll Notification (RPN) for one employee can result in a substantial fine of €4,000, which will certainly focus the mind.
"Given the oversight that Revenue now has, it is imperative that all employers ensure they are fully compliant heading into 2020."
What will happen from now?
The time-consuming end of year process is being eliminated and Revenue is issuing RPNs for 2020 during December (for 2020)
An Employment Summary Detail (P60 replacement) will appear in each employee’s myAccount on 15th January 2020, containing payroll information for each employment undertaken during the year as reported by employers. This can be used in the same way as a P60, e.g. to verify income for financial institutions and there will be an option for employees to create a PDF, save and/or print
Revenue will perform an automatic end of year review for employees, calculating if there is any underpayment or overpayment of tax and USC. This review will exclude employees registered for Income Tax under self-assessment
Then, from the 15th January 2020 a message will appear on myAccount “Review your Tax 2016 -2019”. It is based on the aggregate pay and deductions from all employments during the year. This will result in a Preliminary End of Year Statement being made available to each employee via myAccount, which will have one of the following outcomes:
It can be viewed online by the employee but it is not yet accepted or deemed accepted by Revenue. An employee will have to complete an Income Tax Return to obtain their End of Year Statement
A link to “Complete Income Tax Return” will be available in the Preliminary End of Year Statement.