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.”