HMRC Closures
At present, we are on hold between 45-60 minutes for every phone call to HMRC and this is likely to get worse in the next few weeks.
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Companies, large and small, have a lot of things in common and HR/payroll issues tends to be one of them.
Whether your company is in a good position at present, or in not such a good position, you still have HR and payroll to manage each month and, very often, a series of payroll challenges.
It may be that you have a high turnover of staff that causes ongoing issues, with people moving in and out of the business on a regular basis. Although, even with a fairly stable staff situation there are inevitably some issues: staff sickness, which is mostly unpredictable, and holidays are things that occur most, if not all, months throughout the year.
Keeping track of these issues can be very labour-intensive and most companies use at least some level of automation to help lighten the load. Whilst some of the issues involved don’t lend themselves to full automation, having automated processes that deal with most of the day-to-day issues can be a real help. In that way, the person, or team, responsible, have more time to handle the more complex issues that crop up.
So, what are the key challenges and solutions in payroll?
Every payroll system requires some level of manual intervention and any level means taking up time that can be better spent handling other issues. Manual intervention is time-consuming and can also lead to human error – especially when the person, or team, is under great pressure.
Whenever a business is looking for an experienced payroll officer/operative, they inevitably come up against a key stumbling block: the lack of talent available. Nationally, and even internationally, there is a recognisable lack of experienced staff in all areas, but HR/payroll operatives, of all levels, would appear to be amongst the scarcest. Why this would be the case is unclear, although few would pretend that HR/payroll is the ‘sexiest’ or most exciting of roles.
Any area that covers payments, tax and other monetary issues, is always going to attract a lot of scrutiny and regulation. Ensuring that staff are paid correctly, have access to appropriate benefits and pay their taxes as needed, is difficult in an ever-evolving regulatory framework. Accurate record-keeping is essential and the failure to recognise and deal with adjustments to regulations, can prove very expensive for businesses. Human error can also contribute to this danger, particularly if individuals or teams are under constant pressure.
Although payroll systems can be viewed as a negative part of business spend, they are also an essential one. Failure to pay your staff on time and correctly will inevitably lead to poor staff morale, staff turnover and diminishing performance. It will also lead to regulatory scrutiny. So, having an efficient and up-to-date payroll system is an important part of any company’s success.
There are a number of ways in which you can seek to deliver a consistent and accurate payroll system for your business. These will depend on the size and type of your business; the current HR/payroll support you have in place; what systems you have and what accountancy support you have.
Some of the options would include:
If you have in place a process using spreadsheets and manual data, and it’s working for you, then that’s fine. Why change it if it isn’t broken?
Some businesses are quite comfortable with working in this way, because it works for them and doesn’t cause any issues. And, as long as you review this process and its efficiencies on a regular basis, in line with your business growth and plans, all should be well.
There is still the potential issue of human error which, with the best will in the world, is impossible to fully eradicate, but that’s the risk you have to balance against when looking at the alternatives.
There’s no doubt that introducing a bespoke software platform to automate your payroll will help your business. If you are moving from a previously manual system, then the questions are: will the new system pay for itself; over what period; and can you afford it?
If you can answer each of these questions in a positive light, then there’s no doubt that an automated system will bring major benefits over a manual system:
An automated system isn’t appropriate for everyone, but there are many circumstances where the introduction of some level of automation will be beneficial to most companies.
Most accountancy firms will offer a payroll service to their clients. In many ways it makes sense:
Managing payroll processes for clients is ‘bread and butter’ to accountancy firms, who have specialist teams to handle the processes involved. They also keep up to speed on all new tax and regulatory updates, so you don’t have to worry that your team is up-to-date and managing the processes to the latest edicts and rules.
Another big plus is that you have appointed your Accountants because you trust them to deliver to you a good service, so you can have the same confidence that they will do so for payroll also.
At present, we are on hold between 45-60 minutes for every phone call to HMRC and this is likely to get worse in the next few weeks.
1. The VAT registration threshold has been raised from £85,000 to £90,000. This means for businesses who’s annual turnover was starting to get near that limit, there is a little bit more breathing space. This wasn’t quite the VAT rate reduction we were hoping for but it’s a move in the right direction
With the increase in corporation tax rates in 2023, we are now having to consider each client individually to see whether the combination of corporation tax and personal tax on dividends is still the most tax efficient way to extract money from a business.