Real Time Information (RTI) could create new hazards for small, owner-managed companies, reports Robert Lovell.
When RTI comes into force during April-October 2013, employers will be required to send HMRC payroll payment information that includes information on the amounts paid and the number of hours. The submissions are made when the payroll is processed, which will have to be weekly or monthly to allow the Department of Works and Pension to use the information to calculate Universal Credits payments.
The RTI arrangements are not well suited for one-man companies that pay low salaries and large dividends, as AccountingWEB members discussed in Any Answers this week.
The requirement to log hours worked could also put directors in this situation in conflict with national minimum wage rules.
And smouldering in the background is the PA Holdings v HMRC case, which could potentially pave the way for a wider attack on using dividends as remuneration.