For the first time it is compulsory for businesses with less than 50 employees to file their P35 and P14 year-end tax and national insurance documents online. Employers with 50 or more employees must also file forms P45 and P46 online, and under government proposals this requirement will be extended to employers of all sizes from April 2011.
Over 350,000 small businesses opted to submit paper copies when filing their PAYE returns with HMRC for the 2008/2009 tax year, but any businesses that fail to submit correctly online this year will face hefty penalties.
This new legislation creates a challenge for organisations that currently do not use a payroll product or accountant to manage their payroll, as they will need to submit their figures manually through the HMRC website.
This is a lengthy and error-prone process, requiring a company to set up details for each person on the database and then manually type in their final year figures. A continuous connection to the internet is required whilst filling in and submitting forms, meaning that a clear chunk of dedicated PC or laptop time is needed to complete the process, a luxury for most small business owners.
This new legislation creates a challenge for organisations that currently do not use a payroll product or accountant to manage their payroll
This change in legislation means that many smaller companies are facing a big risk and a significant increase in their administration costs. Small businesses tend to have limited payroll knowledge, which can lead to filing errors that are extremely time-consuming to resolve and also result in firms facing a hit to their wallet with a fine from HMRC for an incorrect submission.
Payroll products that allow employers to file their PAYE returns online have been available for many years from software providers. However, HMRC are currently in discussions with the software industry to agree whether PAYE software offering basic filing functionality should be provided free of charge to employers with nine or fewer employees.
Whilst these discussions are taking place, IRIS is delighted to announce that we have worked with the HMRC to launch a new free of charge, fully functional payroll product to help UK small businesses through the complex and costly maze of red tape by offering a simple, reliable and compliant solution. It even helps to tick the green box by encouraging a paperless office.
IRIS Payroll Basics allows businesses to fill in the forms offline and then file them when they are ready to submit: - a much more flexible solution. Details of this and an alternative free product were distributed on the HMRC Employer's bulletin in February and thousands of businesses have already downloaded the free software and are getting ready to file online.
Research shows that, on average, small businesses spend the equivalent of several working days per month on administration, regulatory requirements and employee related paperwork - much more than they spend on actually developing their business.
The new HMRC online filing requirements have the potential to reduce and simplify administration, but only for those small businesses that are willing to take the time to look at the options available to them.
For more information please visit www.iris.co.uk
