Tax Faculty presses for monthly RTI regime

With one month to go before the introduction of real time information for PAYE, the chairman of the ICAEW Tax Faculty’s technical committee urged HMRC to let employers submit payroll information monthly rather than when payments are made.

When the great majority of employers go into RTI in April they will be required to submit electronic information about tax and national insurance they deduct from employees’ wages to the Revenue “on or before” the payments are made - rather than compiling the end of year summary returns, as is currently the case.

In response to lobbying by the ICAEW and other groups HMRC relented and will now allow some exceptions to the on or before rule (HMRC PDF guide) to let affected companies submit payroll payment and deduction data up to seven days after they are made.

But Paul Aplin, chairman of the faculty’s technical committee, said the change does not go far enough and many employers will see a big increase in payroll paperwork.

“Consider the client with a monthly payroll and some low paid employees who get a weekly advance,” Aplin wrote in February in an article for Taxation magazine. “If the advance is on account of pay and not a loan, there is an obligation to report within seven days. Twelve payroll runs a year has just become 52.”

Continued...

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Comments
taxhound's picture

CIS    2 thanks

taxhound | | Permalink

I thought the CIS rules were bad enough when they brought in monthly reporting a few years back, but RTI takes the biscuit.  Monthly reporting at the end of the month would be a breath of fresh air now.

Combined with their breathtakingly arrogant idea that this new system will actually save time and money for everyone, HMRC appear to have completely lost the plot.

Can anyone tell me whey payroll cannot be filed monthly in the same way that CIS is, ie by the 19th day after the end of the tax month?  Yes, I have heard it is all to do with the new benefits system, but  I cannot believe that anyone is going to be actively using the information the moment it comes in and the additional burden on employers and accountants is horrendous.

This is all a bit late isnt it?

EOAKS | | Permalink

I had a client email me in a state because they had only  heard about it on Radio 5Live today. I had not advised him as he is one of our under the personal allowance Directors and doesnt have a payroll system being a one man band.

Apparently the radio said it was going to cost small businesses dear and it frightened him.

Too late

neiltonks | | Permalink

This is far too late. RTI has been news for two years and been in pilot for eleven months, so it's pointless to make these demands for a major change 29 days before the system goes live! Even if there was a will to do this, it would be impossible because all the payroll systems have been written to work with the regime as it curently stands, and things can't be changed overnight!

Euan MacLennan's picture

What use is the ICAEW Tax Faculty?    1 thanks

Euan MacLennan | | Permalink

Of course, it is far too late to be asking for a fundamental change to the RTI system just a month before it goes live.

I suspect that like the rest of the ICAEW hierarchy, the Tax Faculty is oblivious of the needs of small practitioners.  It was probably unaware that any members actually run payrolls for clients and would be concerned about this issue.  On 5th March, it announced:

"ICAEW Tax Faculty is publishing a series of helpsheets which aim to assist members in getting to grips with RTI. The first two, published today,..."

Getting to grips with only a month to go - it would be funny if it was not so inept.

Perhaps, things will improve when Rebecca becomes more involved.

.

ireallyshouldkn... | | Permalink

I quite agree with the above.

Far too late to be lobbying on this, and far too late to be issuing guidance. That ought to have been out at the latest on the 1st Feb to co-incide with planning for this change. 

The best we can hope for is once the fines come in next year HMRC have relaxes their position.

 I cant see anyone busting a gut for 2013/14 to get things in "on time" when there are no penalties, different story of 2014/15. 

silicondale's picture

Why monthly? Why not annually?

silicondale | | Permalink

Among the hardest hit won't be big employers with a payroll staff who can cope because they have the money to buy fancy software packages - but micro-businesses, who have just about coped with the current PAYE system and many of whom have irregular or annual pay periods.It would horrify me if I have to go online every month just to tell HMRC "no, this month again, we don't owe you anything".

A return each time there is something real to tell them is quite sufficient, thank you.

Too late to whinge

frankdavid | | Permalink

As it says, we will just have to get on with it and help our clients as we always do.

 

RTI will be a car crash if the recent record of HMRC is anything to go by. A client yesterday received 22 CIS penalty notices in 6 envelopes, fines totalled over £4,500. We closed his CIS scheme 3 years ago and these all related to post closure periods.  Apparently came about because of an HMRC Software upgrade.

taxhound's picture

Accept    1 thanks

taxhound | | Permalink

I accept that nothing is going to change pre 5/4/13 and we all "have to get on with it" for now.  But going forward I see no reason why HMRC can't change the rules to allow monthly filing instead of the ridiculous and unworkable "on or before".  Or maybe they just need to earn more money via penalties....

Yep and

The Black Knight | | Permalink

frankdavid wrote:

As it says, we will just have to get on with it and help our clients as we always do.

 

RTI will be a car crash if the recent record of HMRC is anything to go by. A client yesterday received 22 CIS penalty notices in 6 envelopes, fines totalled over £4,500. We closed his CIS scheme 3 years ago and these all related to post closure periods.  Apparently came about because of an HMRC Software upgrade.

Got one of those to deal with this week £5000, paper work on its way to us. Thanks for that. Client informed us scheme had been cancelled ages ago.

and

I expect the practical result of this train crash will be more evaded cash takings to pay undeclared cash wages payments that will result in higher tax credit payments.

They obviously have a plan and that is it?

Let's all make monthly returns!

Briar | | Permalink

The Tax Faculty has made a good, if late, suggestion. Maybe, the Budget could incorporate the suggestion? In other words, the Tax Faculty should be lobbying hard.

I forecast not just a car crash but a major motorway pile-up when small employers realise the full position.

 

If there are to be no penalties in 2013/14 for late filing, then why don't we "force" HMRC to accept the monthly return idea by only filing returns monthly. It would make it a little less stressful for small employers. Years ago, we forced the Inland Revenue to accept that "none" or "nil" did not have to be written in every unused box on Tax Returns - it worked.

Cash in hand

Alan Webb | | Permalink

Got to agree with this last comment - cash in hand payments are already wide spread amongst smaller businesses,  either funded out of under declared takings or even out of the proprietors' own pockets (to avoid the hassle of PAYE) - this can only get worse.

I act for a number of licensed trade clients all of whom pay casual staff on a daily basis. The granting of seven days grace before reporting is a step in the right direction but I agree that we need to move to monthly reporting. More frequent reporting is overkill and will only lead to greater non-compliance.  I am not condoning client's failure to account to correctly for PAYE but the reality is that many small traders in hospitality industry are non-compliant due to the stresses of the job rather than by any deliberate act, and they are going to get hammered!