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Autumn Statement 2015: Coming soon to a screen near you

30th Nov 2015
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The Autumn Statement of 25 November 2015 represents a significant watershed for agents and employers engaged in payroll. For the first time the Treasury has committed to the accelerated roll out of Universal Credit and the full digitisation of the tax system. In fact the numbers set out by George Osborne in the UK’s fiscal plan, in particular the £12bn of welfare savings to be achieved by 2020, are based on the successful delivery of these initiatives. Welfare reform and the digital future of the tax system rely on PAYE earnings data values being shared (by HMRC) with DWP and taxpayers via their personal Digital Tax Account. It’s no exaggeration to say these reforms depend on timely and accurate PAYE RTI data.

Scepticism among AccountingWEB members is perhaps understandable. The implementation of RTI to a strict timetable dictated by Universal Credit in April 2013 could be characterised as ‘rush to wait’ as the DWP’s UC programme experienced lengthy delays. If ever there was a statement of clear intent from Government however, the Autumn Statement was it. Universal Credit is on its way.

Although DWP’s latest statistics confirm there are currently some 141,000 claimants in UC, the accelerated roll out of UC implied by the Treasury’s Blue Book numbers indicate there will, according to the IFS, be some 1m claimants by the end of 2016 rising to some 6m by the General Election in 2020.

Starring: PAYE earnings data from RTI

Similarly the promised post implementation review called for by the OTS, in particular of RTI’s ‘on or before’ reporting, rule has concluded – the Autumn Statement announced also – that all employers, including micro-employers, must comply with the obligation to report RTI on or before the date employees are paid, from April 2016. Again, there are no exceptions. All RTI reporting easements come to an end then.

One of the key reasons for concern over RTI, expressed on the pages and comment threads of AccountingWEB by its members, accountants, bookkeepers and payroll staff working in businesses and practice alike, is the nagging concern as to whether or not RTI data is always accurate.

When AccountingWEB’s Editor-in-Chief, John Stokdyk met with Financial Secretary to the Treasury, David Gauke MP on 10 September, he raised the issue of RTI data. His ensuing article referred to “the continuing niggles over the integrity of real time PAYE information” observing that they “have not dented his [the Minister’s] confidence”.

If Government’s confident reliance on real time PAYE data for the calculation of UC awards to claimants based on their or their partners earnings, (even the same day they are reported by their employers,) leaves the sceptics unmoved then the Autumn Statement’s plans for the use of Digital Tax Accounts provides further evidence the Treasury will not U-turn on this digital future.

What the numbers in the Blue Book confirm is that HM Treasury will invest “£1.3 billion to transform Her Majesty’s Revenue and Customs (HMRC) into one of the most digitally advanced tax administrations in the world, with access to digital tax accounts for all small businesses and individuals by 2016-17.” The announcement reaffirms the commitment made in the March 2015 Budget to introduce simple, secure and personalised digital tax accounts. These will remove the need for annual tax returns and “give individuals and businesses a more convenient real-time view of their tax affairs, providing them with greater certainty about the tax they owe”.

In fact it’s already started. Individual taxpayer earnings data from RTI is already being used to aid the completion of Self-Assessment returns for the year ended 2015. As HMRC flagged in its August Agent Update, and again in the October Agent Update, it has “start[ed] to pre-populate pay, tax and P11D details onto HMRC versions of online tax returns, and that they’re [HMRC] working with third party suppliers to do the same with commercial software”.

David Gauke’s own view is telling: “there will always be an issue with whatever system that you have. But a more transparent tax system does lend itself to higher quality data. The problems emerge more quickly”. In effect: sunlight is the best disinfectant.

For employers and agents, the only way to validate RTI earnings at the point they are reported is via the RTI BACS payment channel to reveal where and how, if there are errors, these have arisen.

Certainty for Government, employers and employees themselves as to their net earnings and tax liabilities, on which welfare and digital tax depend, now relies on paying employees via RTI BACS. The use of the BACS hash in payroll software allows all RTI returns to be validated by reference to the payment's system: confidentially, securely and with a complete audit trail that proves compliance. It’s why HMRC declared paying employees via RTI BACS is PAYE ‘best practice’ almost 12 months ago.

Whatever happens expect RTI earnings data, right or wrong, to be on a client or agent Digital Tax Account screen, on your desktop or mobile, very soon.

To find out more about CreDec payment solutions for your business or practice, including RTI BACS payroll payment services for your payroll clients, get in touch at www.credec.com/rti-bacs or call us on 0871 350 0490

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