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HMRC seek views on revamped direct collection rules
Existing employers with nine or fewer employees will be able to report PAYE information on or before the last pay day in the tax month until April 2016, HMRC have announced.
The department has acknowledged that some of the smallest firms and their agents need more time to adapt to real-time information (RTI), and has agreed to allow two years for affected parties adapt their processes to ensure they are ready to report all payments in real time.
All employers will be required from April 2016 to report PAYE each time they pay their employees, unless an exception applies. The Revenue will be encouraging micro businesses to adapt their processes sooner to ensure that they are ready to report all payments each time they pay their employees by April 2016.
The extention is a narrower measure than the current relaxation of rules for businesses with fewer than 50 members of staff, which will come to an end on 5 April 2014 for employers with ten or more workers.
Paul Aplin, partner with AC Mole & Sons said he would have preferred to have seen the existing easement extended beyond April 2014, “but ministers made it very clear they would not agree to [such a measure]. They and HMRC did, however, listen to the case put to them, and the announcement of an extension of the easement for micro employers will help many thousands of businesses.”
HMRC have also published the results of discussions held with firms to examine the impact of the ‘on or before’ rule, the subject of a recent department survey that attracted more than 24,000 responses.
Around 50% of the agents who completed the poll admitted they found ‘on or before’ reporting difficult or fairly difficult. More than 70% of employers claimed the reporting was easy, with just over 10% finding it very difficult, but 79% of tax advisers and 36% of employers said RTI had created an increase in their administrative load.
Aplin remarked, “What is very striking is that fewer than 10% of respondents, in some questions fewer than 5%, thought the cost of dealing with payroll had decreased or indeed would have decreased in a year’s time. Relieving even some employers of that burden is a positive move.”
The Revenue said it is aiming to improve RTI guidance for micro firms and to work with the software industry to develop new ways to report PAYE information on or before the date on which employees are paid.
The tax authority is also seeking views on changes to RTI rules covered by the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), the Social Security (Contributions) Regulations 2001 (SI 2001/1004), and the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045).
The alterations provide for the direct collection procedure to apply where it is not practicable for the employer to deduct tax by reference to the tax tables: for example, where an employer has no place of business in the UK.
An employee in such cases will be required to report receipt of payments of PAYE income under RTI.
The new regulations make minor amendments to the RTI reporting requirements for employers exempt from online filing, who will deliver quarterly information returns rather than reporting at time of payment to the employee.
Comments should be sent to the taxman by email no later than 24 January 2014.
