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Is someone at HMRC taking the p*ss?

I don't know who drafted these letters that clients have receiving from HMRC this week.  Clearly they are either feeling mischievous or they don't get out of their ivory towers much.

Get this...

"As reporting PAYE in real time happens as part of your routine payroll process, you should expect to see a reduction in time spent on administration".

This is being sent directly to clients.  Those same clients who we will need to discuss fees with for the additonal work involved in RTI.  No doubt some will now expect a reduction.

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Its funny, I have just been writing the standard letter out to our clients explaining RTI and explaining that under the new system there are increased reporting requirements such as hours worked, and that instead of sending a note of payment due 4 times a year and the full file once, we need to send the full file 12 times a year, and before payments are made. I then add  "Whilst HMRC claim this a reduction in administration, we can only assume they mean on their side rather than ours" 

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I've been trying to get clients to pay their employees monthly - only 12 chances to get it wrong instead of 52 - but it's difficult in some trades.

 

I still feel that this is a very unfair element of RTI.

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40 more opportunities to get fined each year with weekly payment

lionofludesch wrote:
I've been trying to get clients to pay their employees monthly - only 12 chances to get it wrong instead of 52 - but it's difficult in some trades.

Tell them it means the difference between 12-fines a year or 52-fines a year.

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Fines

frustratedwithhmrc wrote:

lionofludesch wrote:
I've been trying to get clients to pay their employees monthly - only 12 chances to get it wrong instead of 52 - but it's difficult in some trades.

Tell them it means the difference between 12-fines a year or 52-fines a year.

 

Tell that to the average brickie!!  He wants his money on Friday and he doesn't care if his employer gets fined.

 

Of course it's a money making scheme !  And one that's politically acceptable - so far.  We need to be making more fuss.

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weekly to monthly

I thought it would be a good idea to suggest that an employer changed from paying weekly to monthly.  His last weekly payment will be on 5th April and in the past I would have suggested that he 'eased' his employees into monthly payments by making advance payments until the total for the month was reached.  Not possible now and even paying their first month on about 25th April causes all sorts of problems as HMRC take payment from 25th March - so double payment and recalculation of NI allowances etc. 

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is there a break in period

will a series of warnings be issued first for early mistakes or will they be issuing penalties from day 1.

If its the latter its just another money making scheme like CIS Nil Return fines even if you have never had a Subcontrctor for 2 years but just forgot to file the nil return.

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Payroll frequency changes

How can you make a change from weekly to monthly payrolls?

Your weekly-paid staff will have to manage for four weeks on one week's money.  That's going to make them really happy.

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Time of the change

Hi Catherine,

The change should not be as much as that. A typical weekly payment is actually paid about 1 week in arrears. If you migrate to, say, paying on 25th of the month for the period until the end of the month (ie about 1 week in advance) then, with careful choice of date, the gap is much less.

Tom

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Well .......

..... I've got one employer who's done it.

 

So it's possible.

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We have changed nearly all of ours, including construction.

Some of the employers just didn't give them a choice - I suppose if they were really unhappy they could leave and my clients opinion was that he is flooded with people wanting work and he could soon fill their job.

But for the more sensible clients, we worked with them to talk to the employees, explained how much they would get in a monthly salary and exactly when they would get it. We tried to make sure this was before their mortgage/rent payments at the end of the month.

Then we did it gradually, so did a few fortnightly runs then went onto 4 weekly or monthly. Some employers gave subs to struggling employees on the first monthly run, but this is risky and may cause issues under RTI.

It is possible though, it just takes time - which unhelpfully isn't on our side.

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MY REAL TIME INFORMATION PACK TO CLIENTS IS 34 PAGES LONG!!!!

The Real Time information pack I am e mailing clients amounts to 34 pages long. Lengthy, I know but I do not want any client to come back to me and state they were not informed of all the changes.

 

I spent ages incorporating every detail to ensure I inform clients of the changes. I broke this down into explaining if a change of payment frequency occurs, ensure the employee is in agreement to avoid any contractual breaches occuring.

I then broke this down into the additional work required for the Employer Payment Summission for Construction Industry clients, maternity etc.

 

I then producd a section of fee changes and included a section that employees must inform HMRC themselves of personal address and personal details changes.

 

In summary I have had to produce a manual of sorts.

 

No extra work then, and this is before we even commence with the submissions.

HMRC are having a laugh. I would like to know who is responsible for project managing this lot. They clearly have no real idea of what is involved.

HMRC have informed me that a new scheme I require to be open in April, may not be actioned by them until the end of April. Well that is a breach of Real Time from HMRC. Perhaps if agents came up with a series of penalties every time HMRC were incompetent, we may be able to recouperate the additional cost it takes in time sorting.

One word springs to mind SHAMBLES!

 

 

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self employment

Self employment will be the preferred route of many.

Until the country is bankrupt we will not get anything sensible.

This also has to be a major boost and marketing opportunity for umbrella companies so much so that perhaps HMRC employees have shares in them?

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RTI :-(

I'm fed up with software suppliers promoting 'new income streams' as a result of HMRC's constantly changing policies. Don't they realise that, at the bottom of the pile of self-employed businesses are hundreds of thousands of very small outfits who are not particularly computer literate, not very well off, want as little to do with big brother HMRC as possible because it scares them, and just want their accountant to handle it all at a reasonable cost.

I'm in the middle of thinking how to migrate several from weekly on to monthly payroll so really appreciate the comments above. To be honest, it's not just about keeping client fees stable, it's for our sake as much as anything. We're a very small owner-managed outfit, with health and family support issues, and I don't want to be tied to the computer weekly, a slave to RTI.

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pay dates and payslip dates

We are a very small practice dealing with very small (generally 1 or 2 employees) payrolls. We therefore use basic payroll tools for the payrolls.

The pay is for a set month - eg January.The payrolls are run for the month end (but usually several days before then) so the entry date on bpt and the payslip date has been, for example, 31.1.13. The actual payment can however be anytime from 22.1.13 to 5.2.13, for example, depending on the client.

I cannot seem to get a clear answer as to what date we need to process on in future - will it be the actual payment date if the net pay is paid before the month end but month end if paid after the month end (eg 5.2.13)? .

Will this processing date then go on the manually prepared payslips or will it still be the end of the month which the pay relates to?

Does any of this matter to the rti system as long as you file before the payment date?

 

I have been on two seminars - a local payroll bureau did one and the ICAEW payroll update - but neither has covered this and I can't seem to find it on the HMRC website.

Any advice would be helpful and gratefully received!

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As far as I am aware ...

... the RTI date for deemed payment is the payslip date and the filing must be before this date.

I date all payrolls for last day of the month so should be OK.

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What if ....

.... what if the employee gets paid before the end of the month ?

 

Is that not a payment in lieu of wages so that becomes the new payday ?

 

Hmm - wonder how my software will cope with such irregular payments ?

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As i say ...

lionofludesch wrote:

.... what if the employee gets paid before the end of the month ?

 

Is that not a payment in lieu of wages so that becomes the new payday ?

 

Hmm - wonder how my software will cope with such irregular payments ?

... as far as I am aware, the pay date is the date on the payslip, and the actual date of payment is of no consequence, unless after the payslip date.

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Hmmm.

No honestly - I've seen this mentioned somewhere recently.

 

I'll try to find it ....

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HMRC guidance for software developers

 

The HMRC guidance for software developers regarding the field PmtDate is :--

Enter the payment date for your employee.

If the payment date falls on a 'non-banking day' show the payment as having been made on the regular payday. See http://www.hmrc.gov.uk/paye/payroll/paydays/non-banking-day.htm

 

 

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Yes but ...

... that's not the situation that was in my mind, Old Greying.

 

What if he wants a couple of hundred quid sub to tide him over - say - halfway through the month ?

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That's a sub and not pay

lionofludesch wrote:

... that's not the situation that was in my mind, Old Greying.

 

What if he wants a couple of hundred quid sub to tide him over - say - halfway through the month ?

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Get the job done

My approach on this is to "get the job done".  In the past 4 years I have submitted over 2,000 tax returns and seen an HMRC person 4 times.  On only 1 occasion did that person bother to do anything so mundane as look at an invoice.

All my clients who were paying staff 100% below the LEL have now shut down their employment records.  All staff previously running weekly payrolls are now running either monthly or 4 weekly ones.  Where this causes a financial problem, round sum amounts are given out between payment runs and these are "approved loan repayments" on the payslips.

In order to challenge this, in my view:

1.  HMRC will need to identify it.

2.  They will need to visit the client.

3.  They will need to define the difference between a salary advance and an approved loan repayment.

4.  They will need to show that this does not meet the definition.

Given that the UK PAYE system will be in meltdown for all of 2013-14 in my view, this should be well down their agenda.

It is easy to convert weekly paid people to 4 weekly or monthly when they understand the full implications which include a saving of £20 or so per year in NI for most staff paid around NMW.

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@ MrMischief

Love the pragmatism.

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Penalties

A couple of points on penalties

1. They don't start until April 2014

2. You can only get a maximum of one penalty a month even if you file weekly

3. HMRC will be sending warnings to employers in late 2013 to tell them when they have been late so that they are aware they need to improve before the penalties come in.

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subs/pay/loans

A regular sub against pay at the end of the month is payment on account of pay and therefore triggers the responsibility to report through RTI (and indeed to account for PAYE at that point in time. See CWG2 page 6 :  

If the employee

is not a director, operate PAYE on the earlier of:

• when you actually make the payment

• when the employee is entitled to be paid, even if the pay is not drawn until later.

 ItIt isiiii

(Sorry, I can't get the font larger again now after posting that extract!) It can be difficult to justify that this is a loan and therefore does not trigger RTI. It is one we are still discussing with HMRC at the moment. If this is a one -off event you can include in the next payroll run under the easement announced in December (item 1). But if it is regualr and widespread, you have a real problem. Working on it....

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Subs/advances

RebeccaBenneyworth wrote:

A regular sub against pay at the end of the month is payment on account of pay and therefore triggers the responsibility to report through RTI (and indeed to account for PAYE at that point in time. See CWG2 page 6 :  

If the employee

is not a director, operate PAYE on the earlier of:

• when you actually make the payment

• when the employee is entitled to be paid, even if the pay is not drawn until later.

 ItIt isiiii

(Sorry, I can't get the font larger again now after posting that extract!) It can be difficult to justify that this is a loan and therefore does not trigger RTI. It is one we are still discussing with HMRC at the moment. If this is a one -off event you can include in the next payroll run under the easement announced in December (item 1). But if it is regualr and widespread, you have a real problem. Working on it....

We take on several temporary employees over the summer period, for around 2 months. They're paid monthly, but are offered a cash advance after two weeks work - many take this up. These payments will have to be reported under RTI. I've worked out that the way to do it (using Sage payroll) is to start them off as fortnightly paid employees, process the advance as a payment not subject to tax and NI, submit the FPS on the payment date. Then change them to monthly paid, and process the whole months salary payment on the same process date as all other employees (with an after tax deduction of the advance paid to them). Can anyone see any problems with this approach? (apart from the extra work that HMRC say we won't have.....)

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definition of approved loan repayment?

This is on the payslips as "approved loan repayment".  It is not a regular amount, it is a round sum and it never ties in to the net pay for the week / period which would arise from a PAYE and NI calculator.

I have searched the notes and guidance for a legal definition of "approved loan repayment" and have not been able to find one.  Therefore I define these payments as meeting the definition until someone points me in the direction of the specific clause of the specific Act which means they do not.

 

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@ Rebecca

Good point, but what is a sub?;

Is it an advance against unearned wages? If so it not a payment of earnings.

Is it an advance against earned wages? Then perhaps.

Is it as Mr Mischief suggests a "loan"? Then not.

 

I suspect this will be an issue if HMRC get into the nitty gritty on a particular employer's scheme however unless the advances/loans are made via BACS with the payroll system our HMRC friends will not actually know.

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Exactly

We can split hairs in many ways. But we need to be aware that this needs clearing up at the beginning, not allowed to be brushed under the carpet on the basis that it is a hard question.

One of the really difficult downsides is that some unscrupulous employers could decide to move to "quarterly" payroll with intermediate weekly loans. This would enable them to defer payment of PAYE / NIC until quarter dates rather than monthly. So HMRC has a challenge to agree something workable without it becoming a wide abuse.

And incidentally, for some it is absolutely certainly an advance of earned wages. I once worked for a business where the switch to monthly payroll (before my appointment) caused such uproar with the unions that a variation to the contract of employement was negotiated. In many cases if you asked the employee they would not regard it as a loan but as a payment of their wages. It's a difficult one to prove either way but in my view we need to address it and sort it out. Even if HMRC agrees that "loan agreements" must be on file......

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"Quarter dates"

Sorry, have I missed something? All our small payrolls have always paid on the quarter dates because their tax/NI liability was well under the threshhold requiring monthly remittances. Is there any change here?

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Weekly payroll
We deal with small employers. Where an employer has only one or two employees paid the same amount every week is there anything untoward in us filing in advance for a few weeks or even months?

From Hmrc: Where an employer takes a regular amount each month, they could submit 11 FPS returns (April – Feb) in advance in April and submit the final return in March.

We would be filing on or before the payment dates so no problem here.

If the client informs us of a change e.g. Employee left, or off ill where that week was already filed then corrections could be filed.

We have read a lot about changing from weekly to 4 weekly or monthly, why would the above scenario not work?

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Oh dear !

It's all a bit of a mess already.

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You ain't seen nothin' yet!

lionofludesch wrote:
It's all a bit of a mess already.

I expect the full horror and chaos will not hit HMRC until month-end payroll on Tuesday 30th April.

I am expecting the phone lines to be jammed and HMRC staff redirected from other front-line duties to deal with the problems and enquiries, just like the PAYE Coding Notice crisis.

HMRC never learns anything from it's previous mistakes.

 

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Unsurprising

Apparently, HMRC found no problems switching to RTI with their neat and tidy payroll.

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RTI 'hours worked' benefits implications?

It's Sunday, I'm unashamedly being lazy. Has anyone already done a summary of the implications to various benefits entitlements at tier 1 up to 15.99 hours, compared with tiers 2 and 3?

It's Monday evening, I've answered my own question.. is that a sign of madness?..  An FPS that logs the employee normal hours as Tier 1, is recording them as being under the qualifying hours for Working Tax Credit, both the basic and the 50+ elements. Working at least 16 hours (Tier 2) is also crucial for help if you're responsible for a child or young person; or you're disabled, or 60 or over. And, currently, working a minimum 16 hrs is a requirement for Return to Work Credit, although that's being phased out from 2/7/13. (See www.adviceguide.org.uk which is the CAB site, very good too).

Tier 3 is 30 hours plus. Again that corresponds with a current Tax Credits threshhold for those aged 25 or over to qualify for WTC. And note that the TCO has to be notified within one month if working hours drop below 30 for more than four weeks, for an individual claimant, or for 'a couple with children'.

I don't yet know the qualifying rules for Universal Credit, but the current benefit rules reinforce that we can't be casual about the tier selection within RTI. And client care must include advice on the potential impact on family benefits. Do we all know which of our clients are on TC's? I think this area needs to be given far more serious thought in the whole mix of implications of taking on employees with all their different personal circumstances and financial needs.

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Reduced Administration

Now that simple cloud payroll software (such as our own Open Payroll software) is available for an exceedingly reasonable fee, many employers will wonder why they are outsourcing payroll work. This is particularly true under the RTI system where there cannot be a disconnect between submissions and payment.

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Let me put things this way

Today I received a letter dated 27 February 2013 from HMRC PAYE about a payroll issue.  The letter informed me I was not authorised to act - I thought I still was even though the client had been doing her own payroll, as I had done it for 2011-12.

So I suggest that is about as easy peasy a letter to write about payroll as you could imagine:

"Dear prat accountant, you are not authorised to act for this client, yours faithfully, HMRC."

My original letter was helpfully enclosed, stamped "HMRC Received" on 23 Oct 2012.

So that is 127 days to issue the easiest reply on PAYE you can possibly imagine.  Now roll the clock forward 60 days, these people are going to be deluged with queries about all sorts of aspects of RTI.

If this is going to be a success, then Fergie should apply to UEFA to get Man Utd reinstated in the Champions League!

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Agent authorisation?

Slightly off topic but still important - we have several payrolls that we have been dealing with for some years but dont have official agent authorisation in place .  

I seem to recall that applying online only covers online dealings with HMRC but that the old FBI-2 that we used to send by post is now defunct.  How do we make sure we can deal with HMRC on ALL aspects of payroll for our clients?

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Form 64-8

Homeworker wrote:

Slightly off topic but still important - we have several payrolls that we have been dealing with for some years but dont have official agent authorisation in place .  

I seem to recall that applying online only covers online dealings with HMRC but that the old FBI-2 that we used to send by post is now defunct.  How do we make sure we can deal with HMRC on ALL aspects of payroll for our clients?

Not the File By Internet FBI-2 form, which gave the same authority as online agent authorisation, but you have to submit a signed paper form 64-8 before HMRC will talk to you about your client's affairs.

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Agent Authorisation Problems...

Hi there

We are a firm of accountants with 150 payrolls in the pilot and have had nothing but problems with agent authorisation since joining the pilot.

One HMRC agent I spoke to openly admitted that RTI had wiped some details from files ie agent details, however, how true that is I don't know?

We have always completed FBI-2 forms for the payroll department and have never had the problems we are currently experiencing. I have even had agents phone me to discuss a PAYE query for one of our clients but not be able to discuss details with me because we did not have authority!! They are now insisting on a 64-8 so maybe that now overrides the FBI-2 or maybe we were always completing the wrong form? HMRC have advised a 64-8 has to be done and when the client gives us the issued code we have to tick for both 64-8 and FBI-2 on the Government Gateway.

We have called HMRC only to be told they will not discuss anything with us even though the client we are calling about shows as one of our clients on the Government Gateway??

We asked for a list of clients we do not appear to hold authority for anymore and were told they would not supply this so we have had to, in the last couple of weeks, re-apply online for all our 300+ payroll clients.

The amount of phone calls you need to make and receive increases significantly once RTI is up and running so agent authority is incredibly important to have in place.

 

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Mission statement

HMRC Mission statement?

 

To take awkwardness to a whole new level, to waste as much time and effort as we can reasonably manage, to turn a blind eye on evasion and avoidance and concentrate on herding and cross selling penalties to compliant sheep. In general to make your life a misery because we are big and we can.

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monthly reporting

PLEASE!

Then a large number of these queries become obsolete and RTI should be no more of an additional button press each month.

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I agree ...

Mister E wrote:

PLEASE!

Then a large number of these queries become obsolete and RTI should be no more of an additional button press each month.

... and make the deadline 19th of the next month for all reports!

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I don't understand why it can't follow the monthly CIS reporting system. All payments made to the 5th of every month are reported by the 19th.

But obviously, that's far too complicated for the Government's declared mission of simplifying admin for small business.

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Not HMRC's fault

non-sequitor wrote:
I don't understand why it can't follow the monthly CIS reporting system. All payments made to the 5th of every month are reported by the 19th.

Think about it.

As PAYE is only paid over once a month, HMRC has no interest whatsoever in receiving the information more often than once a month - by the 19th when the PAYE becomes payable.  Indeed, it would be easier for them not to have to add up various submissions to arrive at the figure they expect to be paid.

The RTI requirement for filing on or before the date of payment to the employees is driven solely by the DWP piggy-backing on the HMRC's PAYE system in order to obtain information for its calculation of Universal Credits.  After all, it would be unreasonable to expect the DWP to have nothing to do for 3 weeks of the month and then have overload in one week!

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I accept that that is probably true...

Euan MacLennan wrote:
After all, it would be unreasonable to expect the DWP to have nothing to do for 3 weeks of the month and then have overload in one week!

I accept that that is probably true, but since the vast majority of employees (in all except micro businesses) are paid on a salaried basis each month, this still wouldn't solve the problem of timing as most payrolls would be run in the last week of the month.

Electronic transmission of PAYE data makes a lot of sense, the only issue is that of timing and roll-out. Moving to a monthly reporting basis and exempting or deferring the roll-out to micro businesses would remove the vast majority of problems and complexity.

The reason why they haven't done this is that they are trying to use PAYE data to fill a data gathering hole for the DWP. It's the usually politically driven square pegs and round holes problem.

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It's being tied down.

For me, the problem is not being able to do anything but submit wages every Friday morning.  Holidays, I suppose I can work around but I still see this as being a helluvan unreasonable imposition.

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It's never any ones fault?

It's never any ones fault that the beauty of it?

I bet the criminal element have seen its obvious flaws and are well poised to take full advantage.

Government seems to have but one tool at its disposal. Disruption.

 

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Disruption cuts both ways though...

The Black Knight wrote:
Government seems to have but one tool at its disposal. Disruption.

I suspect that the demands that have been made for both monthly reporting and exemption / deferral of micro businesses will only happen once RTI rolls out and essentially stops HMRC functioning for the foreseeable future.

At some point HMRC will be forced to acknowledge that they cannot cope with the sheer volume of calls / problems and changes will be implemented "temporarily" as a work around.

Such "temporary" work around's to IT systems often have a surprising longevity.

The politicians will rail against HMRC, especially Margaret Hodge the Right Honourable Member for Stemor and chair of the commons Public Accounts Committee, but provided the DWP has sufficient data to commence with, I suspect they will live with the consequences of data quality.

Data quality has been a fundamental issue with government databases (e.g. DVLA's 90% accuracy figures), since the beginning of time anyway. 

[EDIT]: Lo and Behold, the great U-turn commenceth!

http://www.accountingweb.co.uk/article/hmrc-announces-last-minute-rti-ea...

 

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It is not a joke.-it is policy.

 We had a similar argument when SA started.

For HMRC to admit that taxpayers (including MPs) require an accountant to help help them prepare all but the simplest returns would be to admit that a central plank of HMRC's straegy is flawed.

That is  the returns are designed so that the average taxpayer may deal with his own affairs. 

 RTI is similar. The claim is that RTI will be a more effective cost efficient way of administering Payroll taxes.

 For HMRC to admit that the implementation of RTI, never mind the running of the scheme, has been for the taxpayer, a mind boggling costly exercise, time and money, would be to admit that a main plank of its justification was flawed.

I have yet to hear any HMRC official openly admit that it is costing the taxpayer (including via his agent) anything at all.

 

 

 

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