HMRC has extended the temporary relaxation of real time information (RTI) reporting rules for small businesses for a further six months to April 2014.
The relaxation applies to businesses with less than 50 employees and was originally set to run until October 2013.
According to HMRC:
These transitional arrangements only apply to small employers who pay their staff manually, for example, weekly or fortnightly and then take their records to their payroll provider monthly to process the payroll for the month. These arrangements do not apply to small employers who can run their payrolls weekly or fortnightly and can report payroll information at the time of payment.
In March, HMRC announced the easement after a widespread campaign across the profession and business groups, urging the government to ease the reporting burden on small firms by allowing them to submit payroll data just once a month.
Typically, this can reduce the number of required reports from up to 52 per year to 12.
Affected businesses will now not have to change their reporting approach halfway through the tax year, the Revenue said.
It added it would work with businesses over the coming months to identify whether there are any specific circumstances with on or before reporting it will need to cater for in the long term.
According to HMRC figures, around one in six payments reported under RTI since the system came in in April 2013 has been made using the relaxation.
In addition, 23% of the smallest employers are yet to report under RTI and may benefit from the relaxation.
Chair of ICAEW tax faculty and AccountingWEB tax editor Rebecca Benneyworth welcomed the announcement.
“This is the result of some hard work and extended engagement between employer representatives, including professional bodies, and HMRC. Thanks go particularly to Paul Aplin who has been leading for the ICAEW on this. I am also very pleased that although the easement will end in April 2014, HMRC will continue to work with stakeholders to identify the real issues for very small employers.
"The tax faculty will be issuing a call for evidence to members to help with this work, so that suitable adjustments to the on or before rules can be negotiated for 2013/14. As a member of ABAB, I shall also be looking carefully at the compliance costs and cost savings identified by HMRC and testing whether these have been robustly arrived at.”
Chairman of the CIOT’s Employment Taxes Sub-Committee Colin Ben-Nathan, also welcomed the extension, which he said is positive for small businesses.
“'On or before reporting’ has been a significant concern for small employers. This announcement is good news and shows that HMRC has continued to listen to the concerns of small employers, their agents and the organisations that represent them. It will help small employers continue to engage positively with RTI and to keep the costs of RTI reporting to a minimum," he said.