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Employers’ mistakes should not be immediately punished under the new PAYE system, the Chartered Institution of Taxation (CIOT) has told HMRC.
The professional body has called on the taxman to widen the remit of the amnesty period for real-time information (RTI) so that no penalties are levied on firms that submit inaccurate returns for the first several months.
The Revenue’s current proposal is to sanction erroneous submissions as soon as Finance Bill 2013 gains royal assent in around July, when RTI will be launched. Fines for late in-year returns will not be introduced until April 2014.
The CIOT’s Colin Ben-Nathan warned of “a substantial new responsibility and burden being placed on employers” and insisted that the penalty regime should be “proportionate and give time for employers to get used to the new and sometimes onerous obligations RTI imposes on them”.
He added that, given the set-up as is stands, firms may decide to delay filing their PAYE returns if they fear they will be penalised for an inadvertent mistake.
Ben-Nathan, who chairs the CIOT’s employment taxes committee, also expressed his organisation’s concerns about awareness of RTI and the bureaucratic burden the new system will bring for many smaller employers.
“The government needs to redouble its efforts to publicise what employers need to do to fulfil their obligations,” he said.
“Employers will frequently come across situations in which they are unsure what their obligations are in regard to how and when to report certain payments and what to include on returns. It will be essential for them to be able to obtain assistance from HMRC via a dedicated RTI helpline and for the department to ensure there are sufficient, and well-trained, advisers available to answer questions.”
The results of recent poll by the Forum of Private Business suggested that awareness of RTI system is growing among small firms but many remain “ignorant” of the forthcoming requirements.
