Real-time Reporting – Revenue Clarification, December 2018

12 December, 2018

Revenue has provided much sought after guidance on the real-time reporting of:

  • Benefits-in-kind and notional pay
  • Share-based remuneration
  • Shadow payrolls
  • Expenses
  • Payments to directors
  • Holiday pay and advance payments

Benefits-in-kind and notional pay

BIKs and other notional pay should be reported on either:

  • the day the notional payment is made, or
  • the earlier of the next pay day or 31 December of that year.

This would apply to items such as company cars, medical insurance etc.

Where the actual value of a benefit is not available at the time of running the payroll, employers should include a best estimate of the value in the relevant payroll submission to Revenue.

When the actual value of the benefit becomes available, any adjustment should be included in the next payroll submission to Revenue.

Revenue has also clarified that employers should review notional pay regularly (at least quarterly).

Share-based remuneration

 The treatment of share-based remuneration mirrors that of BIKs and notional pay, that is, report on either:

  • the day the notional payment is made, or
  • the earlier of the next pay day or 31 December of that year.

If there is difficulty in obtaining a precise valuation for inclusion in payroll, Revenue has stated that employers should include a best estimate of the value of the benefit in the relevant payroll submission to Revenue.

When the precise value of the benefit becomes available, any adjustment required should be included in the next payroll submission to Revenue.

Revenue has drawn specific attention to shares which vest on 31 December, advising employers to consider whether the shares have vested after close of business in Ireland, in which case the shares may be regarded as vesting on 1 January.

Shadow payrolls

In a very welcome move, Revenue has confirmed that payroll submissions for shadow payrolls can be aligned with the Irish employer’s payment dates, alleviating the need for Irish employers to run separate payrolls for shadow payroll cases.

In calculating Irish workdays, Revenue has clarified that employers should provide a best estimate of the number of days an individual works in Ireland. If there are more (or less) Irish workdays than originally estimated, the pay should be amended in the following payroll submission.

Revenue has accepted that in cases where a shadow payroll is required due to a PAYE dispensation application being rejected, the employer must operate PAYE on the employee’s taxable pay in Ireland on a backdated basis. However, employers may report this in the next payroll submission, rather than reopening prior periods. Revenue confirmed that Revenue Payroll Notifications (RPNs) will issue on a week 1 basis in these cases.

Expenses

A payroll submission is required on or before any taxable emolument is paid to an employee. This includes the reimbursement of taxable expenses.

Where taxable expenses are reimbursed to an employee, a separate payroll submission is required on or before the date of payment (this requirement would seemingly relate to expenses reimbursed outside of payroll only).

Where expenses are paid through a company credit card, Revenue has indicated that it is prepared to accept a different process. For the purposes of the operation of PAYE, payment for expenses incurred on company credit cards can be regarded as notional pay. As such, where costs incurred are taxable, these amounts should be reported to Revenue via a payroll submission to Revenue:

  • on the day the taxable benefit arises, or
  • the earlier of the next pay day or 31 December of that year.

Payments to directors

The PAYE system also applies to payments made to proprietary and non-proprietary directors. From 1 January 2019, any emolument paid to any director must be reported to Revenue on or before the pay date.

Emoluments which are paid to proprietary directors more than six months after the end of the accounting year are deemed paid on the last day of the previous year. In such instances, the payroll submission for that period must be amended and re-submitted to Revenue.

Holiday pay and advance payment

Advance holiday pay may result in an employee receiving two or three weeks’ pay in one week, with the employee then receiving no additional pay in the following two or three weeks. Revenue has clarified that the employer may apply those weeks’ tax credits, rate bands and USC cut-off points to the holiday pay. Employers must then ensure that the most up to date RPN is used when the next payment is made to the employee. 

Contact us

Doone O'Doherty

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6593

Jessica Webbley-O'Gorman

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 6518

Emily Bourke

Senior Manager, PwC Ireland (Republic of)

Tel: +353 1 792 6796

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