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Monthly reporting temporarily allowed for firms with fewer than 50 employees
Transitional arrangements to allow a six-month relaxation of real-time information (RTI) arrangements for employers with fewer than 50 employees have been announced by HMRC, and leading tax professionals hope it will become a permanent solution.
From RTI’s launch on 6 April to 5 October, employers with fewer than 50 members of staff may send information to the Revenue by the date of their regular payroll run, but no later than the end of the tax month on the 5th.
Taxation understands the change of heart follows pressure put on the taxman and the Department for Work and Pensions by a range of bodies, including the Administrative Burdens Advisory Board, which were concerned about the compliance costs for firms that pay employees weekly, or more frequently than monthly, but process their payroll monthly and may need longer to adapt to reporting PAYE data in real-time.
The Revenue will continue to work with employer representatives during the summer to assess and understand the impact of RTI on smaller businesses, and consider whether improvements to real-time reporting will address concerns without compromising the system’s benefits, or the success of the Department for Work and Pension's universal credit.
Paul Aplin, a partner at AC Mole & Sons chartered accountants, said, “There were significant practical concerns for smaller businesses, and they have been recognised by HMRC and by ministers. The relaxation gives the profession a six-month breathing space to work with the Revenue to agree a permanent solution.”
The head of taxation at the Association of Chartered Certified Accountants, Chas Roy-Chowdhury, said the deferment is a “sensible approach, and it is encouraging that HMRC have listened to the accountancy and payroll sectors’ collective voice on this matter and acted with common sense”.
But he went on to warn that universal credit’s fit into the RTI system is a “problem looming on the horizon”.
“The Department of Work and Pensions has failed to consult, engage or understand the massive burdens it expects businesses to carry when designing universal credit. A change in the regulations is essential to facilitate payments on a RTI basis, yet we have heard little from the department on this matter,” said Roy-Chowdhury.
Steve Wade, employment tax director at KPMG, described the latest RTI announcement as “a lifeline to small businesses”.
He added, “The easing of the requirements should make compliance significantly easier and cheaper for many small employers up and down the country: a sensible and welcome move at a time when so many businesses are already struggling and we need to get the UK economy up and running.”
He hoped the late change to the forthcoming system will give the Revenue time “to work out a more permanent way in which to address the concerns that these small employers have raised around the difficulties of complying with real time PAYE reporting”.
If the impact assessment: http://www.hmrc.gov.uk/tiin/rti-improving-paye.pdf had included realistic estimates for the costs of operating RTI to be carried by employers, this welcome decision by the Minister may have been reached so much earlier, with a lot less sweat and tears...