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HMRC signals alternative RTI compliance measures being investigated

10th Sep 2014
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Yesterday’s announcement by HMRC that it is to delay automated RTI late filing penalties for employers with less than 50 employees pushes the start date back for these employers by 5 months to 6th March 2015. Interestingly, the HMRC press announcement indicates that it will be looking at alternative means to encourage RTI compliance by employers in advance of March 2015. Subsequent guidance issued today to RTI stakeholders including the payroll software developer community makes clear that this announcement relates to use of the RTI BACS hash channel, or BACS hashing.

Does this indicate HMRC is looking to publish further guidance on RTI best practice and compliance over the coming weeks relating to the use of BACS hashes? It does look this way.

HMRC’s decision to use 50 employees as the threshold for staging the start of penalties is itself noteworthy as it actually commits a relatively small number of employers to the automated penalty regime starting on 6th October, as planned. Less than 5% of all UK employers employ more than 50 people. The overwhelming majority of employers (employing less than 50 employees) will all become liable to penalties on the same date, 6th March 2015.

HMRC’s formal recognition of the RTI BACS channel as a means of proving employer compliance with their RTI reporting obligations and corroborating their correct operation of PAYE should be welcomed. The RTI BACS hash mechanism announced in July 2011 has been a compulsory feature of UK payroll software since RTI commenced in April 2013 and HMRC’s systems comprehensively manage hash matching and reporting. For those employers that choose to pay employees by direct BACS, payroll software inserts identical hash codes into RTI FPS reporting and employee payments, automatically.

Alternative means of proving compliance for employers, including those using the RTI BACS payment option, would be welcomed by many employers and agents as a simpler way of achieving low cost compliance and a safeguard against automated financial penalties.

If this is indeed HMRC’s intention then issuing guidance well in advance of the 6th March penalty start date as soon as possible to allow employers to use hashing to ensure compliance is a necessary next step.

As HMRC’s press announcement makes clear: watch this space. There’s obviously more to follow.

To find out how to access CreDec RTI BACS for your business’ payroll or provide RTI BACS services to your payroll clients, get in touch at www.credec.com/rti-bacs or call us on 0871 350 0490

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