Finance Bill 13: Changes to RTI penalty regime

The government introduced a number of RTI and PAYE late payment filing penalties in this years' Finance Bill, which won’t come into effect until April 2014.

However, penalties for filing accuracy will come into force as soon as the Finance Bill receives Royal Assent.

Earlier this month, tax bodies were dismayed at the government’s determination to levy in such penalties and concerned that they would have an impact on small businesses.

The new Finance Bill penalties, while a source of concern for tax bodies and other professionals, appear to make an attempt at sympathy to those who will take time getting used to the new PAYE filing system.

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Comments

Mendacity    6 thanks

allanr | | Permalink

Just so long as none of the publicity contains any tosh about helping small businesses to keep current and save costs, and they admint that this is a cash-flow enhancing, revenue raising initiative that will burden small businesses in particular, then so be it.  But please, let's not pretend it is anything else.

Who benefits?    1 thanks

Ian McTernan CTA | | Permalink

I can't see who benefits from this-HMRC will have spent somewhere in the region of £380m on the system, then we can anticipate teething problems and lack of suitable trained staff leading to a bottleneck on the 'helplines' when literally thousands of employers try to call to sort out problems they have with the system.

Are you late if you can't get your query answered as the message cuts you off (no record of your call at their end), and how long exactly are you expected to waste out of your valuable time which should be spent keeping the company running to satisfy HMRC's latest whim.

HMRC doesn't have the staff to handle the information on RTI so basically it's a massive exercise in shifting work from HMRC to the employers and then fining and penalising them when they can't use it and can't get any help on it.

I can see yet another barrier being created before new businesses take on any employees and yet more cash payments, 'self employed' and one man service companies popping up.

If I was a new business thinking of taking on it's first employee this, along with employer's NIC and all the fines and penalties I might have to pay would certainly put me off expanding in that fashion.

lionofludesch's picture

Surely it's an extra tax ?    1 thanks

lionofludesch | | Permalink

Surely it's an extra tax ?

RTI    4 thanks

James RQL | | Permalink

This measure will kill off direct employment by very small companies with just a few people.

Small companies do not have such systems in place or the means or funds to install them and the additional costs of using a bookeeper or RTI payment service to avoid penalties will add to overheads. And all this is to ensure the Treasury receives its NI and tax due from the larger employers who have used other means to obtain flexibility - witnesss Starbucks!

The result is that we will return to the days of cash in hand employment or the creration of self-employment situations. A two or three person company should not be the target of these measures as by their very nature the employer has to be flexible and so do the employees.

A disappointing and rather draconian measure that will affect many thousands.

lionofludesch's picture

Cynical    1 thanks

lionofludesch | | Permalink

The whole penalty regime is about raising money without being able to criticise the Government. They can just say "you needn't pay - just file all your returns on time", knowing full well that someone, somewhere along the line will fall by the wayside.

Wish I had the taxman's job - less work and more money for doing it.

I have a client who operates

stevie63 | | Permalink

I have a client who operates a mobile bar.  Staff are paid at 2am on Sunday mornings and we look after payroll.  Do I have to set my alarm each Saturday night to deal with this.  HMRC seem to suggest so.  Does anyone else have similar impractical cases?

lionofludesch's picture

Unholy Rush    1 thanks

lionofludesch | | Permalink

I don't see why there's such a hurry.

 

Monthly is adequate, surely ?

Stevie63    1 thanks

smball | | Permalink

Stevie63

I believe you will have to operate on the earliest of:

  1. the next ‘regular’ return the employer is required to send; or
  2. seven days following the day on which the payment is made

See http://www.hmrc.gov.uk/rti/on-or-before.pdf

 

 

RTI - who is it really for?    1 thanks

RichardZ | | Permalink

The cynic in me says that RTI is being driven by the Dept of Work & Pensions.

Unfortunately HMRC have to police it. Maybe they'll do a better job at this than they do policing the minimum wage legislation.

Does anyone else have similar impractical cases?

P2 | | Permalink

A farm in a rural area with no broadband connection pays farmhands on Friday lunchtime - has done so for centuries probably.  Details are sent to the book-keeper the following week.  She processes the payroll and pays HMRC on time by tjhe due date (under the current system).

Worried that there is no way of avoiding penalties under the proposed system.

Happy weekend to all,

P2

 

 

 

johnjenkins's picture

I agree    1 thanks

johnjenkins | | Permalink

that many employers are going to be put off, and the way things are going I also see a dramatic rise in Limited Companies. The only challenge being IR35 and we all know where that is heading.

How many Accountants will advise "some" clients not to employ staff because of these situations?