Tax bodies dismayed over RTI penalties

Professional tax bodies are disappointed with the government’s determination to levy in-year penalties for errors in Real Time Information (RTI) submissions from April 2013.

The penalties will kick in from the start of the first full year of RTI, 2013 to 2014, and many in the profession are concerned about the impact this will have on smaller businesses.

“After stakeholder consultation, we have published our guidance on late and inaccurate returns sent in real time. This will give most employers a year to get used to reporting in real time before implementing the new penalties," explained HMRC's RTI programme director Suzanne Newton.

While the CIOT welcomed the announcement that there will be no penalties until April 2014 if in-year full payment submissions are sent in late, and no automated late payment penalties until April 2014, if there are errors in-year that are corrected by the year end, under RTI there will potentially be penalties.

Tina Riches, technical director at the CIOT, said: “Under RTI it will often be the client themselves doing the regular submissions, so there may be more errors in year than HMRC are used to seeing. It will be easy to make timing errors, which would be corrected before the year-end, until employers get used to the new system.

“In our view, in the first full year of RTI, penalties for errors should, as has happened in the pilot, only apply to errors on the final full payment submissions for the year. This would give employers a fighting chance of getting to grips with RTI before penalties start to bite. HMRC have still not provided a satisfactorily clear reasoning to justify starting in-year penalties from day one.”

Frank Haskew, head of the ICAEW Tax Faculty, was also not convinced with the changes HMRC announced yesterday. “We're still very concerned about all this,” he said. “And we're certainly at one with the CIOT on this. There's a hint of déjà vu with a lot of this, in particular with XBRL reporting, and RTI seems to be going down the same way.”

Continued...

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Comments

It is time to leave    7 thanks

jvenegas16 | | Permalink

HMRC is only creating burden on businesses. Penalties is their only way for them to generate revenue at a time when the economy is slowing down. However, they do not make their guidelines clear in any case. Besides, they overcharge employers and taxpayers with interest on misallocated payments; they don't allocate payments to the oldest balance allowing them to continue to charge interest, unless you know about it and query. Is that fraud? To some extent, my answer would be: yes, it is. Do they harass taxpayers? Yes, they do. Can you put pressure on them when you need an answer or something sorted? In most cases, unfortunately, not.

Where is equality and justice?

Gorvenment is running a £3.5bn procurement fraud and overclaim expenses by MPs, reduced tax payments by multinationals, and where do they look into: the easy targets: small businesses, the ones fighting to get through difficult times.

Is that 'working together'?

Can of Worms...    3 thanks

Ian McTernan CTA | | Permalink

So HMRC are planning on fining companies for making mistakes in being forced to submit information that might not be correct as adjustments are made quite regularly to payrolls in the real world.

What exactly do we get if HMRC make an error? Nothing.

Will they deal with this information any better than they have done for years with P14's, P11ds, etc? No.

It's a one way street with HMRC not only holding 4 Aces but also the Smith & Wesson (it's an old poker joke).

I can imagine if you asked the average small/micro business owner if they had even heard of RTI and the responsibilities they are going to have from April most would say 'what? I have a business to try and get through this economic climate I cba dealing with that as well'.

 

 

FULL GUIDANCE ON PENALTIES

AWebbie | | Permalink

That link (and the two principal links running from it) runs to something like 4,000 words. That isn't guidance; it is a thicket of verbiage to get lost in. It is atrocious

.

ireallyshouldkn... | | Permalink

Can someone 'in the know' do a quick summary of the penalties?

 

Imposing Penalties    1 thanks

Peter Tucker | | Permalink

Could it be that the idea of calculating who should be penalised is a tricky a proposition as actually operating a system which has the potential to receive in excess of 30 million individual PAYE statements on a single day?

There is also the question of why HMRC beleive that getting this quantity of data on a very regular basis will "improve PAYE operation", bearing in mind the problems they had in dealing with P35 Reminders and the processing of some 60 million Forms P14, received one a year.

Hey Ho .......

HMRC mixed messages ?

RandDTaxUK | | Permalink

A client with one employee and a single Director earning under the primary threshold received a letter last week telling them that their PAYE account was being deleted because they had no PAYE tax paying employees and that they should re-register when and if they did.

Surely this flies in the face of RTI requiring notification of all payments including those under the Tax and NI thresholds.  Even if this were because it is a different system one would have thought they would mention that RTI would be required.  One would almost think they wanted people to fall foul of the system.

I wonder how many other less tax savvy companies have received similar letters.  

yeah its time to allow further erosion of the taxbase!

david5541 | | Permalink

Maybe its time all small business's followed the example of amazon/google/starbucks/vodafone/arcadia/phillip green/Mp's..../goldman sachs who did a deal with HMRC?

jvenegas16 wrote:

HMRC is only creating burden on businesses. Penalties is their only way for them to generate revenue at a time when the economy is slowing down. However, they do not make their guidelines clear in any case. Besides, they overcharge employers and taxpayers with interest on misallocated payments; they don't allocate payments to the oldest balance allowing them to continue to charge interest, unless you know about it and query. Is that fraud? To some extent, my answer would be: yes, it is. Do they harass taxpayers? Yes, they do. Can you put pressure on them when you need an answer or something sorted? In most cases, unfortunately, not.

Where is equality and justice?

Gorvenment is running a £3.5bn procurement fraud and overclaim expenses by MPs, reduced tax payments by multinationals, and where do they look into: the easy targets: small businesses, the ones fighting to get through difficult times.

Is that 'working together'?

RTI

Matty1969 | | Permalink

RTI (Really Trashy Idea).

From where exactly did this scheme originate? One thing for certain is that it did not stem from small business. Like most things it's a top down process imposed with zero consultation. Probably Crispin whose Tory daddy got him a plum summer job at the Treasury. It is 100% about cutting costs to HM Government, forget that at the same time these costs get multiplied and moved onto business in the worst recession in most people's lifetime. Business generates the wealth in UK PLC, the government just get in the way. Right now the country needs small government. This idea is the complete opposite of that requirement and will help the recession lengthen into the dim and distant... Rant over.

Taxes should be done by a

marktav | | Permalink

Taxes should be done by a professional who is government certified and has complete knowledge of filling out the required paperwork. Mistakes can cause financial impacts on people to the point of no recovery and it should be regulated.
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