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The Chartered Insitute of Taxation (CIoT) is calling for changes to the Real Time Information (RTI) penalty system for inaccurate PAYE returns, suggesting it should be extended.

As it stands, businesses will be penalised for incorrect returns from when the Finance Bill 2013 gains royal assent, expected to be July this year, but the organisation believes this should be extended to April next year.

It also comes despite penalties for late in-year returns not being applied until April 2014, with CIoT saying that inaccuracy levies could be similarly introduced at this time.

Chair of the CIoT's Employment Taxes Committee, Colin Ben-Nathan, explained that the penalty regime "must be proportionate and give time for employers to get used to the new obligations".

"It is welcome that the new late filing and late payment penalties will not be applied until April 2014," he noted.

"However, given this, it seems odd that the penalty for inaccuracies in RTI returns will be in place from summer 2013. Employers may take the view that it is best to delay filing if there is a risk they could be penalised for an inadvertent mistake."

The new RTI system, introduced this April, aims to increase accuracy in the PAYE system.

Posted by Thomas Fletcher

Date published 15 Feb 2013 | Last updated 15 Feb 2013

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