It’s been just over a month since the roll out of the one of the biggest changes to payroll, Real Time Information (RTI). Small businesses were affected first by the changes which came into operation on 6th April 2013, so how are they getting on? Concerns about the impact on business and HMRC’s capabilities were rife amongst the business groups in the months preceding roll out. Our own research, published in February 2013, indicated 65% of businesses were not confident HMRC would be able to cope with the changes. Poor publicity, data security and cuts to support services were highlighted by members as potential problems and there was further pessimism around HMRC’s own online technology remaining accessible at peak times. A month in to the scheme HMRC called business groups, including the Forum, together to update us on how RTI is working from their end and to ask us for feedback from members. The positive news from all groups was that business had successfully risen to the challenge and 65% of all PAYE schemes are now successfully being reported in real time. The Forum’s research earlier this year indicated that whilst 17% of business saw immediate benefits to RTI and 27% saw longer term benefits, 49% did not see any benefits. HMRC accepted that some businesses may see transitional or additional costs in the move to real time, however it is believed that the much streamlined end process should, come the year end, result in a fall in the time taken and associated costs. The Forum lobbied for a relaxation of penalties with RTI and we’re happy to report that there will be no in-year RTI late filing penalties 2013/14. In addition, HMRC made an eleventh hour concession to employers with less than 50 employees – until 5th October 2013 they may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month. It is a positive sign that HMRC has recognised the time businesses require to adjust to a new system, even if it was at the last minute, and implemented the relaxations. However, come the 2014/15 tax year or 6th October 2013 for some businesses, penalties will be in place and employers need to be aware of this. Ensuring you are operating RTI correctly in this transitional period is essential to avoid a penalty landing in your letter box. Our helpline staff and advisers can help with any issues you having with RTI and further guidance is provided on the HMRC website.
Almost two months on from the biggest change in PAYE legislation for 60 years, we explore how small businesses and HMRC are coping with the change.