Small Business Tax Advice: HMRC Advised To Delay Extending RTI Reporting To The UK’s Largest Firms.

RTI was hailed as the most radical and fundamental change to the PAYE system since its introduction in the 1940s.

Despite concerns expressed by accountants and businesses, the government pressed ahead with RTI claiming that it would not only revolutionise the way tax was collected, but that it would also make the taxation system simpler to use and more transparent. However, as was feared, the introduction of Real Time Information did not run as smoothly as planned: up to 40,000 taxpayers had their income tax deductions adversely affected by the government programme.

Although this problem has since been fixed, there still remain concerns about the accuracy of the system.

Such is the level of concern that some of the UK’s largest businesses are now advising that extending real-time PAYE reporting to the country’s largest companies should be delayed.

Under the new RTI system, employers are obliged to tell HM Revenue & Customs about gross pay, tax and National Insurance contributions when or before payments are made. Previously employers had been able to wait until the end of the financial year before disclosing this information. RTI was introduced in order to facilitate the new Universal Credit system which will shortly replace the old Tax Credits system. It eventually went live in April, 2013, following a 12 month trial. Stinging criticism from stakeholders and institutes resulted in allowances being made for businesses with fewer than 50 employees to continue to report payrolls monthly until October 5.

Speaking on behalf of large enterprise, Kate Upcraft, payroll adviser at ISIS Support Services, claimed the existing system will be unable to cope with the country’s 16,000 largest private companies switching to Real Time Information (RTI) reporting. The companies are concerned that the Treasury has agreed to HMRC pressing on with plans to extend the scheme in the autumn despite issues such as HMRC overstating tax receipts “on a massive scale as they are corrupting employer data”. She added that other members of the RTI customer user group had voiced concerns regarding a number of issues over an 18-month period in meetings with HMRC, but most of these had been ignored.

In spite of these criticisms, HMRC has recently reported that the process is working well and claimed that its own evidence suggests the administrative burden for employers is actually diminishing as a result of the introduction of RTI. An HMRC spokesperson issued the following comment:

“Real time filing of PAYE information will bring PAYE into the 21st Century, and will improve the operation of PAYE for employers, HMRC and employees. Over 1.57 million PAYE schemes have already started to report PAYE information in real time.”

“This is a huge change. Few issues have been identified so far and those have been resolved quickly. Employers are joining RTI according to their normal payroll cycle, and for some, it will take a little while to get into the routine of reporting RTI. In the first year, we want to support them in meeting their new obligations.”

If you are experiencing problems with RTI, then Steven Glicher accountants are here to help you.

We can file all of your year-end and in-year returns on your behalf with HMRC and provide you with P60s to distribute to your employees.

We can help you manage the migration to RTI and all the reporting changes that it involves, leaving you to concentrate on managing and growing your business. If you would like clarification on this matter or would like to discuss any other issues relating to small business tax advice, then give Steven Glicher accountants a ring on 0161 485 8007

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