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Farmers and other employers have received letters from Revenue in recent days warning them to prepare for new payroll rules coming into effect on 1 January next.
There will be a number of changes. The most visible is that every time wages are paid to an employee the details will have to be submitted immediately to Revenue on a Payroll Submission Request. Overall, there will be closer scrutiny of wages and payments to employees from January.
The Revenue letters advise that employers who use their accountant to handle PAYE and PRSI matters should now check that the accountant can fulfil its new requirements. Most farmers who employ workers fall into this category – they have this paperwork carried out by their accountant.
The major accountancy firms are now gearing for the new rules which Revenue has launched under the slogan “PAYE modernisation”.
IFAC head of tax Declan McEvoy notes that the new reporting requirements will be relatively straightforward where a farm employee works regular hours and is paid the same wages every week or month.
It will be more complex where an employee works irregular hours, common with part time and family employees, and is therefore paid varying amounts each week.
In such cases, farmer clients will have to notify IFAC each week of what wages have been paid, to allow IFAC submit the Payroll Submission Request. Revenue will penalise employers whose submissions are late.
New staff unit
IFAC is currently preparing a phone app which it hopes will make it straightforward for farmer clients to notify it of wages paid, typically every week. A new staff unit will work to ensure high compliance by IFAC’s farmer clients.
This week, IFAC has written to farmers about the new reporting requirement.
“This means significant changes that will impact on you, your employees and us, where we act as your agent for PAYE/PRSI,” it states.
Revenue wants a list of an employer’s current employees, IFAC told its clients.
“Revenue will use this list to ensure that your employees are all registered on the introduction of PAYE modernisation on 1 January.”
“Failure to engage in this process may result in your employees not being registered with Revenue on 1 January at which point emergency tax may be applied to them.”
On the broad sweep of the new rules, Declan McEvoy says: “Our immediate priority is to ensure you are operating PAYE correctly. Focus on eliminating any potential delays in reporting correct payroll information, particularly information in respect of benefits-in-kind and taxable expenses.
“Finally, bear in mind that the payroll data you submit will be fed into Revenue’s risk analysis systems. This may highlight weaknesses in your procedures which could trigger Revenue queries. If you have any concerns, it is advisable to talk to your accountant without delay.”
Some agri contractors and a small number of larger farm businesses handle payroll themselves, usually using payroll software.
In its recent letter, Revenue advises such businesses to ensure their software is capable of submitting the required reports from 1 January.
On this, Declan McEvoy says: "For any employers currently relying on manual or spreadsheet based systems, payroll software can help you maintain better records in-house. However, it may make sense to outsource your payroll to your accountant or a payroll service provider as they are likely to have technology in place that integrates with Revenue and reduces the likelihood of errors. In addition, they will have experienced payroll staff who can help you keep up to date with the latest requirements.”
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