Real Time Information: a New Year update
The CIPP has been working closely with HMRC and other stakeholders since the first Real Time Information (RTI) discussion documents were published in 2010. One of the key messages we are helping to get across to everyone is the importance of accurate data, explains Diana Bruce of the CIPP.
Background
At the moment employers send HMRC details of payments and statutory deductions for all their employees at the end of the tax year. HMRC states that most of the coding errors that occur are due to those employees who have more than one source of income and because this is not always identified until after the end of the tax year, the individual is not paying the right amount of income tax. So when the employee information is eventually sent in, it can be months if not years before the appropriate corrections are made to individuals tax codes.
A regular feature in and out of the news over the last couple of years has been about HMRC tax code errors, refunds to some and big tax bills to others. This is all to do with the new system that was introduced in 2009, the National Insurance and PAYE system (NPS). It is actually a very positive move that as all these tax code errors have been identified by the new system as it means that the information HMRC hold is continually becoming cleaner and more accurate.
So RTI has been introduced to ensure that people are paying the right tax and at the right time. RTI will mean that the information normally sent at year end will actually be sent to HMRC before or at the same time as a payment is made to an employee. So whether the pay frequency is weekly, fortnightly or monthly – all information must be sent to HMRC every time someone is paid. This move will see the end of the current Annual Employer Return process.
Timeline
Continued...
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Bad news re P45/P46
They did a similar action with CIS when they withdrew the CIS25 vouchers, leaving contractors to formulate their own statements. Years down the line there are still problems with people not understanding what is required on the statements, and this isn't restricted to the smaller business.
The withdrawal of these forms (or the equivalent) will be a retrograde step and will cause lots of problems.
it's a bad joke 2 thanks
This is a bad joke. Those people who've managed to convince themselves it's a good idea should be locked up in a padded cell with the keys thrown away.
us Mac users
So far all software put out by HMRC has been fine for Macs, although for some unknown reason they expect us to upgrade to the latest version of everything whereas Windows users can lag many years behind ... probably because the teething troubles with new Windows OSs are legendary, whereas, apart from Lion, Mac OSs tend to work pretty well first time.
To clarify 1 thanks
To clarify, if it was more or less any large organisation other than HMRC I would be all for this, as it is progress.
HMRC don't listen to people, their staff are in general hopeless. They totally shut down their entire system for 72 hours not once, but twice per year - NO-ONE else still does that!
I am 99% confident they will make a total mess of doing this and then blame everyone else, including those people who warned them not to.
RTI 1 thanks
One can only hope that HMRC will provide small employers - free of charge - with the software necessary to comply with this ridiculous regulation. And that it will work, first time, every time, without falling over as did the (now) excellent PAYE software for the first year or two.
The change from P45's and P46's is going to totally confuse small rural employers; let's hope we get plenty of advance material to show our clients, and that it's written in understandable English without the word 'Penalty' scattered throughout the text.
Does make one feel like giving up.