Geraldine Browne

Columnist

Geraldine Browne

Director at BDO Northern Ireland

Payroll: Much More Than Processors

The strapline during the pandemic of “Keep Britain Paid” from the then Chancellor, Rishi Sunak, has shown how important the payroll function is to all businesses. It was no accident that payrollers were deemed essential workers during the pandemic. Payroll teams throughout the UK had to manage their way through complicated furlough calculations as businesses struggled to keep people paid. Payroll is now rightly recognised as a businesscritical function.

Celebrating the payroll team’s contribution to the business should be on the agenda for all employers this month as we celebrate national payroll week. It takes place between 5 and 9 September 2022. It was first established in the UK by CIPP in 1998 to celebrate the payroll profession and to give it the recognition it deserves. As the NI lead of payroll at BDO NI, I have been reflecting on how we celebrate as a team (more on that later!), how much payroll has changed over the years and what we can expect to see in the future.

NO SIZE FITS ALL

Our client base in Belfast ranges from paying one employee to several thousand. In a typical outsourcing model, we work in partnership with our client to process the payroll. This was particularly evident during the pandemic as we worked in unison with our clients to ensure that all employees were paid. It is something I am particularly proud of, that we were able to quickly enable our team to work securely at home and that we delivered for our clients.

We are seeing more requests for outsourcing payroll as businesses reflect on how the pandemic impacted the payroll function. Sickness leave of key staff and the difficulty of recruiting payroll staff have led to businesses reassessing the risk of not being able to pay employees. In addition, the payroll function has become much more than payroll processing, and outsourcing allows the business to focus on the many strategic payroll tasks. We are also seeing requests for outsourcing on a more short-term basis as a business and have adapted to become much more agile and flexible in dealing with requests outside of the typical outsourcing model. We are also able to draw on the expertise of our wider tax team to offer support on other questions outside the remit of payroll. This is particularly so when our clients are not UK based but require guidance.

COMPLEXITY OF PAYROLL

Running a payroll is now a highly complex process with a vast array of regulatory and legislative changes. Payroll teams throughout the UK had to quickly understand the CRJS rules at the height of the pandemic. In total 11.7 million employees were furloughed at a cost of £70 billion.

HMRC has set up a task force to recoup amounts claimed in error. They expect to recoup £2.3 billion and they expect employers to review their claims and return any amounts claimed in error. They will typically send a letter to the employer setting a deadline for response and asking for further information on the claims. The reviews can ask for details on every employee for whom furlough was claimed together with the calculations and payslips. This is just one example of what is involved in payroll calculations.

HMRC also enforces the NMW (national minimum wage) and the Government is “committed to cracking down on employers who break the law”. Many employers fall foul of the rules due to unintentional technical errors and the payroll team needs to have an understanding of the rules and checks in place to ensure that they are being adhered to.

The above are just some examples of what is involved in paying employees. There are additional complexities, salary sacrifice arrangements, holiday pay calculations, health and social care levy and IR35 which demonstrate the added complexity.

PAYROLL MUCH MORE GLOBAL THAN EVER

The UK is also experiencing a workforce exodus as employees consider working abroad to work remotely. This impacts the UK payroll team as they navigate the complexity of retaining an employee on UK payroll. Whilst they may also have withholding obligations in the new country, employers have to understand their obligations in both countries and may be held responsible for ensuring that their employees’ tax payments are calculated correctly and that they comply with reporting requirements. We at BDO Northern Ireland are able to assist employers in this area. We are a member of BDO Global which has more than 1,700 offices across 164 countries. We can work with our fellow BDO colleagues across the globe to assist with the complexities of the payroll processing for remote workers. In summary, 2022/23 looks set to be an interesting time for the payroll sector. The increasing complexity of payroll, the globalisation of the worker and the talent shortages of payroll staff all lead to employers ensuring that they value their current payroll team. We will be celebrating this month to show appreciation for the work that the payroll team has done.

If you would like to talk to us about any issues raised in the above article, or would like to find out more about our payroll services, contact Geraldine via Geraldine.browne@bdoni.com.