RTI concessions for SMEs watered down, say tax advisers

16th April 2013

HM Revenue and Customs (HMRC) has watered down its concessions made to small businesses regarding the new Real Time Information (RTI) PAYE reporting system, according to tax advisers.
 
They suggest concessions are now being limited to businesses with less than 50 employees which do their payrolls manually, as opposed to electronically with the aid of a computer system.
 
However, HMRC insists it has not changed the original scope of the temporary relaxation of reporting requirements for small employers. Up until October 5, these firms can continue to send payroll data on a monthly basis.
 
Initially, fears that smaller firms would struggle to cope with the more demanding elements of RTI, even with the aid of additional free software, resulted in HMRC agreeing to give them more time to adapt.
 
Yet tax advisers believe the decision to limit the concession is at odds with HMRC’s claims that RTI is now working smoothly following initial teething issues.
 
One adviser, Baker Tilly, believes that RTI policy on small businesses is in disarray, having received phone calls from clients unable to get answers from HMRC’s helpline, website or "swamped payroll software suppliers".
 
HMRC software is said to have prevented a number of small firms opening a 2013-14 payroll for RTI reporting until 2012-13 had been finalised.
 
"This was a known issue [a number of] weeks ago and it is disappointing that HMRC could not fix it," says Baker Tilly.
 
The advisers report instances in early 2013 where HMRC automatically set up payrolls within the RTI pilot scheme without telling employers. Business owners only discovered this issue when they attempted to file their 2012-13 returns electronically, only to find they had been rejected.
 
Essentially, the acid test for the system will be the number of RTI payroll submissions successfully matched to bank payments first time by computers.
 
Baker Tilly added: "The bookies are probably not expecting a high proportion."
 
For further information on the changing face of PAYE reporting visit our RTI FAQs page.

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