A quarter of small companies are unaware of the requirement to file PAYE real time information (PAYE) from April next year, according to according to a Federation of Small Business (FSB) survey.
The lobby group polled 1,700 small firms and found that just 16% were up to speed on RTI; 25% of respondents had never even heard of the initiative.
RTI is being introduced for all but the largest employers from April 2013, with HMRC encouraging firms to sign up early under its RTI pilot scheme. The real time implementation is being fast-tracked because the Department of Work and Pensions needs to get up-to-date pay data from the tax department to calculate Universal Credit payments under the new unified benefits regime.
The RTI project is also intended to simplify the payroll process and make reporting new starters easier, but 66% of the FSB survey respondents doubted that RTI would achieve these aims.
The survey also found that learning how to operate the new process would cause problems for 33% of respondents, and 24% worried about the potential disruption from HMRC enquiries and inspections.
FSB chairman John Walker said that with six months to go before implementation, the survey highlighted a worrying level of ignorance. Without adequate government education government, small firms won't be able to prepare - and it wouldn’t be fair if they were subsequently penalised for non-compliance.
“We're concerned that it could flop if government does not step up its game in communicating the changes,” he said.
"There are a number of steps that a business must complete before they can provide real time information to HMRC so it is critical that those affected know about it. Of the very small number of firms that are aware of the change, 30% have had to buy new software for their business. HMRC needs to act now so that all small firms can prepare their business as they only have six months in which to do it.”