Tax bodies call for RTI penalty respite

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Professional tax bodies called on the government to hold back from charging employers penalties under the new real time information (RTI) system for PAYE reporting.

In their responses to HMRC’s latest consultation on RTI the ICAEW Tax Faculty and the Chartered Institute of Taxation (CIOT) both urged the tax department to delay levying penalties on employers for in-year submissions during the first full 12 months of RTI’s operation.

With enhanced penalties for late submissions and careless/negligent errors on self assessment returns causing trouble, tax advisers are increasingly concerned that HMRC is using its penalty powers as a way to generate extra revenue. HMRC should not charge penalties for late payroll returns until the RTI system is working properly, the Tax Faculty argued.

Under the new payroll system employers will send information about tax and national insurance they deduct from employees’ wages to HMRC when they are made - rather than at the end of the tax year in April-May, as happens now.

Real-time PAYE is well into its operational pilot phase, with more than 250,000 schemes expectred to come on board before the regime becomes mandatory in April 2013.

“We would like to see the whole RTI system working properly, at capacity, for a full tax year, before penalties are imposed,” the ICAEW said. “Given resource constraints this is likely to take some time and we therefore recommend that the penalty regime should not start until October 2015,”

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  • Other ICAEW concerns
  • The view from the CIOT
  • HMRC agent account manager comments

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About Nick Huber

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I’m a specialist business journalist and have a particular interest in tax and technology. 


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14th Sep 2012 12:35

RTI penalties

IF RTI is going to be so onerous why did the professional organisations appear to be so tongue tied while it was developped.

I have read the guidance I have watched the webinar from the Tax faculty. As far as I am concerned this is being introduced to :-

Pass on the respondibiltiy to the employers from HMRC as they are incapable of capturing data correctly with their current systems (hence the furror over P800Ts issued for very earlier tax years and for taxpayers already submitting Self-Assessment tax returns and ESC A19). We are told that this new and wondrous RTI will solve all the problems and there will be no more mistakes on tax codes etc.. Think again.. Until the BIK system is also subject to RTI there will always be problems with codes and underpayments/overpayments of tax. As for the use of RTI to calculate the Universal Credits. Well Idon't think of this much either. Whovever came up with these schemes is not from this world I am sure...Raise more revenues via penalties for the government coffers. This government who do not appear to get their finances in order. (I was horified to hear on the TV the other night that a ocal council wants to pay the new Maire £64,000 per annum!!! To do what may I ask? Complete and utter waste of money).

I have been working in tax in one form or another for over 20 years and I am really in dispair at the direction the whole tax system is being driven.

I have been banging my head against many brick walls recently and I am seriously considering investing in a very well padded helmet to protect my sore head.

HMRC and the government go on and on about morality they shoudl look at themselves in the mirror first. ...



Thanks (3)
15th Sep 2012 17:09


I find that new employer references take 6 weeks or so to come through.  There is one I applied for on 17 May which has yet to show up, so that's 4 months then.

Under the current system in order to produce weekly and monthly payslips to clients I use a "dummy" employer reference and accounts office reference from a client who entered liquidation.

What am I supposed to do under RTI if HMRC's current useless performance in issuing these carries on?

The answer is that I will find a way, regardless of what guidance the prats at HMRC come up with.  My clients are going to get their payslips on time in full, if that means using a reference which mucks up the HMRC database then so be it.

Thanks (1)
17th Sep 2012 10:32

Universal Credit

The HMRC representatives at the Digita conference last week repeatedly made the point that the RTI system has largely been designed to feed into the new Universal Credit system, hence the need to capture earnings AND hours worked on each pay day.

Thanks (0)
By fozia
17th Sep 2012 12:07


I have spoken to our payroll software providers and HMRC as to exactly when the "on and before" relates to - is it the eranings period end e.g. 31st December or the day by which payment should be made which as per contract says up to 7 days after the end of the earnings period which could be 7th January.  Surely this falls outside of the paye month (5th January).  so exactly what date is the deadline and would it generate  a late return penalty if i filed it on 7th January after our return on Christmas???

Weekly periods could end on Sunday, so do we need to get information by Friday to submit and then constantly make adjustments for absences that occured over the weekend.  How many accountants are going to get into work on a Sunday to file online information received from their clients over the weekend. 

The PAYE system needed an overhaul but this is geared purely to help make Universal Credit work, and who knows when that disappears and we are left with a system that is impractical to run and flawed.

Thanks (0)
17th Sep 2012 12:15

rules and regulations are gettingout of hand

the pressure on small office practicioners is reaching breaking point

Thanks (1)
17th Sep 2012 13:10

integrated computer system...

working within the public there's a statement that the word oxymoron was invented for.....

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17th Sep 2012 13:16


i think you need to compress it a bit more

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17th Sep 2012 15:32

RTI practicalities

I can understand why RTI makes sense for large companies.

However, there are very many companies with just one employee - the owner/director. And salary is low with no tax and a very small amount of national insurance.

Surely there should be a deminimis level for reporting? Why make employers incur a cost (maybe £10 or more in admin time) to report that £1.20 or indeed £NIL is due?

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17th Sep 2012 15:37

RTI practicalities

If its linked to Universal Credit why not exempt small companies where only owner/directors are on the payroll and they certify they are not claiming Universal Credit ?

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18th Sep 2012 10:58

RTI /Tax Faculty webinar

The tax faculty held a webinar on RTI on 12 September.  It is well worth a listen and can be downloaded from the following link. You don't have to be a Faculty member.

Kind regards


Thanks (1)