Is your internal payroll running as smoothly as you think? Mazars director Jennifer O’Neill advises small firms to outsource.
Pay As You Earn (PAYE) came into Ireland in the 1960s. The changes in the payroll system since its introduction and the other challenges that come with it have made it a critical part of any business to ensure it is calculated accurately.
There is a perception that the payroll software can calculate the payroll by simply entering the changes each month into the system. With my many years of experience working on payrolls, doing onsite payroll reviews, payroll audits, and implementing payrolls, I can assure you that this is not the case.
Payroll has changed in so many ways over the years. 2009 saw the introduction of the income levy to what was subsequently replaced in 2011 with the Universal Social Charge. Revenue also abolished the relief from PRSI on pensions deductions. Employers now have to tax and report share award gains through the payroll. For our public-sector payrolls, they had the introduction of the Pension Related Deduction (PRD) in 2009 to be replaced in 2019 with the Additional Superannuation Contribution (ASC).
As payroll taxation is continuously changing and there are new taxes and reporting obligations, it’s vital to have trained payroll professionals preparing the payroll. They need to keep up-to-date with the revenue changes and update the system accordingly. Therefore, many companies have requested us to undertake payroll reviews and audit their internal payroll processes and procedures.
For those who are using the outsourced payroll model, they have the security of the outsourced firm who is responsible for the changes in legislation being applied to their payroll. Within Mazars, we ensure that all staff are trained by the Irish Payroll Association (IPASS), and we keep up-to-date with legislative payroll changes. We have the added value of our own personal and global mobility tax team to support clients with payroll taxes both in Ireland and other jurisdictions across the world.
What challenges are ahead for payroll compliance?
“Gender pay gap reporting is due to be enacted into Irish law by the end of 2019. Publication of differences in pay by reference to job classification will be required and will initially be applicable to employers with more than 250 employees. Mazars are now supporting clients through our outsourced payroll devision to facilitate the calculation required.”
What’s the most common error identified during payroll audit reviews?
“The most common error we find in owner/managed businesses is the incorrect application of PRSI. On a payroll review carried out by our team, we identified a significant overpayment of employers PRSI over many years. Unfortunately, the company was only allowed to reclaim four years overpayment due to time restrictions under law.”
About "Ask the Expert": a new regular feature that provides valuable insights directly relating to growing your firm across specific areas of business.