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A group of MPs has expressed apprehension about the fast pace at which HMRC are instigating their real-time information (RTI) system for PAYE and have suggested that a delay to a full launch would have no detrimental effects.
RTI began a phased introduction in April, with all employers expected to be fully migrated onto the system by October next year.
‘The speed at which RTI is being delivered is… concerning’, says the All-Party Parliamentary Taxation Group in its latest report, which acknowledges RTI as ‘undoubtedly the biggest change to the PAYE system since its introduction in 1944’.
It goes on to point out that many tasks have yet to be completed by the taxman prior to UK-wide delivery of RTI, including gaining a full understanding of the migration and additional administrative costs, and devising of a strategy for micro-business and the digitally excluded. (Earlier this year, the Low Incomes Tax Reform Group criticised the Revenue for its ‘inadequate’ assessment of the impact of RTI on small employers.)
In its report, PAYE at the Crossroads, the All-Party Parliamentary Taxation Group also advises that the needs of business take precedent over the policy deadline for the Department for Work and Pensions’ new universal tax credit.
‘We note that the majority of tax credits will not be migrated into universal credit until mid-2015,’ reads the document, adding that ‘should HMRC delay the migration of RTI up until this point, the effect on universal credit will not be substantial, due to the relatively low number of claimants, all of whom will be able to self report.’
But the likelihood of a stoppage is ‘slim to non-existent’, according to KPMG director Steve Wade, who warned taxpayer firms not to assume they would ‘get more time and thus [decide to] put their planning on hold’.
The Revenue today launched a video guide to introduce employers to RTI procedures.
How do HMRC reconcile this statement in their recent press release
"RTI is a new way for employers to report their employees’ pay and tax details. It will make it easier for employers, pension providers and HMRC to administer PAYE"
with
"many tasks have yet to be completed by the taxman prior to UK-wide delivery of RTI, including gaining a full understanding of the migration and additional administrative costs"?
I agree with KPMG director Steve Wade's comment that the likelihood of a delay is "slim to non-existent" - HMRC will simply ignore the All-Party Parliamentary Taxation Group's advice. Don't forget that HMRC mandated the use of iXBRL accounts for company tax filings from 1 April 2011. They refused to back down even at the last minute despite protestations from ICAEW and CIOT (together with other professional bodies) - for a medium-sized company you're doing well to get one set of accounts tagged in iXBRL for less than £1,000. Meanwhile, Companies House, which was going to mandate iXBRL from March 2013, announced a year ago that it was going to drop the requirement "because of the government’s absolute determination not to add new regulations that affect small business" http://www.companieshouse.gov.uk/about/electronicServices.shtml
So on one hand you have Companies House trying to reduce the administrative burden and cost on businesses in the present tough economic environment, whilst on the other HMRC goes on its own merry way. I don't see why HMRC should view the impact of RTI on businesses any differently.