A Case Study of St Andrew's Healthcare RTI preparations with MidlandHR

St Andrew’s Healthcare: clean bill of health ahead of RTI
Organisational objective: To be fully compliant, ahead of schedule, with HMRC’s new legislation regarding Real Time Information (RTI)
HR/Payroll departmental objectives:
·         To provide a first class service to employees
·         To provide accurate information through a single, streamlined, easy to access system
·         To take a best practice approach to managing data and continue to maintain high standards and complete data integrity
Project Objectives:

To become one of the first organisations to go live on HMRC’s RTI pilot project

To work in collaboration with MidlandHR to enable the successful implementation of RTI through iTrent
Benefits for the organisation:

·         Reduction in year-end documentation
·         Removal of P45 documentation (replaced by leavers’ statements)
·         Employees’ tax positions assessed and adjusted, as required, on a more frequent basis
·         Accurate reporting, allowing over/under charging to be analysed and cleared by HMRC on a more frequent basis and the data updated monthly
Benefits for the employees:
·         Shortfalls/overpayments of tax addressed in a more timely manor
·         Change in circumstances dealt with quickly and effectively, including family tax credits and other pay related benefits 

St Andrew’s Healthcare, the UK’s largest not-for-profit mental healthcare charity, worked closely with HR and payroll solutions provider MidlandHR to go live on HMRC’s RTI pilot. After successfully going live on the pilot in May 2012, St Andrew’s Healthcare has faced various challenges along the way, but is confident that it is well prepared for RTI go live in April.
Headquartered in Northampton, with regional sites in Essex, Birmingham and Nottinghamshire, the charity employs over 4,000 members of staff who all play a vital role in supporting the specialist services that the charity offers.
In May 2012, St Andrew’s became the first MidlandHR customer to go live on HMRC’s Real Time Information (RTI) pilot project.
RTI is one of the biggest changes to hit payroll since the introduction of PAYE, fundamentally altering the way in which employers and pension providers send information about PAYE to HMRC. Aimed at improving the operation of Pay As You Earn (PAYE) its main objectives are to:
o   Make PAYE more accurate for individuals
o   Make PAYE simpler for employers
o   Reduce HMRC’s costs
o   Reduce Tax Credits and error fraud
o   Enable HMRC to provide DWP with up to date information for the new universal credit system
Once completed, employers will not have to face the annual effort of Tax Year End as their payroll will be consistently more accurate throughout the year.
Why choose to pilot RTI?
Following a review by HMRC, St Andrew’s Healthcare was invited by HMRC to participate in the RTI pilot. The organisation had been using MidlandHR’s iTrent for all of its HR and payroll requirements since 2008. The introduction of iTrent had resulted in St Andrew’s undertaking a thorough update of its housekeeping processes and this best practice approach to managing data meant that iTrent provided the perfect platform for RTI. 
Neata Underwood, Payroll Manager at St Andrew’s Healthcare explains: “With the good working partnership we share with MidlandHR, and the active involvement from MidlandHR’s team of HR and payroll experts, it was a natural progression to become involved in the RTI pilot scheme. This has enabled us to benefit from significant investment in support during the development/trouble shooting stages and build further on the existing partnerships, particularly as MidlandHR is recognised as a market leader for payroll functionality.
“From the outset, MidlandHR impressed us with its commitment to staying fully informed on the upcoming changes, working closely with HMRC, lobbying against issues of concern, and keeping customers like ourselves up-to-date with what it could mean for us in practical terms. This has been through a variety of means including regular consultation events at MidlandHR’s head office which I have found invaluable. The additional online support and advice has also been useful to keep us up-to-date with the latest developments, including from their leading legislation advisors via the MidlandHR blog.”
Collaboration Working
A project team, represented by finance, payroll, IT and HR was set up to discuss the requirements for the pilot. Together a timetable was established with key milestones and SMART objectives agreed and assigned to the relevant areas.  The main milestones were represented by the system testing, data cleansing, system upgrade, test file upload and finally the Full Payment Submission (FPS) file. 
As payroll manager, Underwood took responsibility for coordinating the project, providing regular updates between the project group meetings to ensure the timeframes set were achieved.
Due to the annual tax year reporting requirements it was essential to finish all reporting in a quick and efficient way.  This was completed early April 2012 to allow the maximum time to be devoted to the testing of the iTrent payroll RTI system by both the payroll team and the HR department.  During this period the HR team took responsibility for the cleansing of the existing data formatting to meet HMRC’s guidelines. 
Once the April payroll had successfully concluded, and all testing had been completed, the system was upgraded to allow for the RTI project to go live, with the charity becoming the first MidlandHR client to carry out a successful Employee Alignment Submission (EAS) test file on 8th May.
Explaining how MidlandHR and St Andrew’s worked together towards the go live date, Underwood says: “Throughout the pilot, MidlandHR’s series of workshops, networking and online/telephone support have been invaluable, giving us the ability to network with similar organisations, challenge the original design from HMRC and be at the forefront of the decision making process. I have enjoyed the collaborative approach and support throughout the process from MidlandHR (and HMRC) to see this project take shape.”
Changes in Processes
The changes to RTI have required alternative ways of working to ensure that the issues surrounding employees’ personal and payment details are consistent with HMRC’s specified guidelines and that the data is accepted within the monthly file transfer.  To accommodate these changes and ensure this happens correctly, a number of reports have been introduced.
Challenges for the Charity
As well as the changes required for RTI, St Andrew’s payroll team also had to deal with a number of additional challenges.  The end of the tax year coincided with the closure of the historic defined benefit scheme. This required a new pension system set-up and the necessary transfers, additional payments, annual salary increases, bonuses, and structure changes as well as a new postal system.  The payroll team also had the added complication of a delay in recruitment which had resulted in a 20% drop in staffing levels at a critical time.
The future impact to St Andrew’s Healthcare
The major benefits to St Andrew’s, as an employer, relate to the reduction in year end documentation, the removal of P45 documentation (replaced by leavers’ statements) and also the knowledge that employees’ tax positions are assessed and adjusted, as required, on a more frequent basis.  The charity now also benefits from accurate reporting which allows over/under charging to be analysed and cleared by HMRC on a more effective basis and the data updated monthly.
Meanwhile, St Andrew’s Healthcare’s employees benefit from having any shortfalls/overpayments of tax being addressed on a timely basis. Changes in circumstances can be dealt with swiftly and effectively, particularly with regard to family tax credits and other pay related benefits. 
Underwood concludes: “It has been a challenging but ultimately rewarding process for St Andrew’s Healthcare and particularly the payroll team. I am committed to providing a first class service to the employees of the charity and our use of iTrent allows me to do this effectively. Early adoption and implementation of RTI has helped us maintain complete data integrity and allowed our existing high standards to be raised further.
“I am extremely proud that St Andrew’s has led the way and look forward to seeing the positive impact over future months and years as the project continues across the country.”