HMRC will ease Real Time Information (RTI) reporting deadlines for small businesses with fewer than 50 employees that pay their staff weekly or more regularly.
Until 5 October, small employers who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run, but no later than the end of the tax month (5th).
Earlier this morning, the tax department announced: “HM Revenue & Customs recognise that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for small businesses.
"HMRC will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension's Universal Credit."
The last minute news comes 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.
Paul Aplin, technical chairman of the ICAEW Tax Faculty recently wrote an article in Taxation magazine calling for a monthly RTI regime to ease the burden on employers paying staff weekly. Requiring employers to send payroll monthly to HMRC would be logical because currently employers have to pay payroll tax to HMRC on the 19th of every month, he argued.
Aplin told AccountingWEB his article in Taxation magazine was just one element of a many-stranded effort by a lot of people to get HMRC to relax its “on or before” stance.
In recent weeks, HMRC’s director general for personal taxes, Ruth Owen, visited Aplin’s firm AC Mole & Co in Somerset and met with employers to see how they were coping with RTI - including clients who currently report monthly but pay employees weekly or give them advances.
“To see with her own eyes and hear directly from people who operated payrolls was a very significant factor in HMRC seeing the practicalities rather than just the theroetical issues,” Aplin said.
Aplin said the current stance resolved 90% of the issues his payroll colleagues faced with advances and interim payments through the month. “To have those issues solved is a huge victory for common sense,” he said.
“I know that this is only a solution for six months, but it shouldn’t be seen as a temporary sop. It’s a breathing space that gives us the time to arrive at robust solutions that will be permanent.
“My position will be completely unchanged. I will still be looking for a solution that doesn’t quadruple the administrative burden on small employers.”
CIOT president Patrick Stevens commented: “By October 2013 we should have a clearer idea of what concessions small business will require for RTI to work effectively for the good of all. And then we can have a sensible dialogue with ministers and officials about how to build what we have learned into the design of RTI and universal credit in future,” he said.
Chas Roy-Chowdhury, head of taxation at the ACCA, said deferring RTI requirements for SMEs until October was a “sensible” approach, but warned: “The problem looming on the horizon is how universal credit fits into the RTI picture. The Department of Work and Pensions has failed to consult, engage or understand the massive burdens it expects businesses to carry when designing universal credit. A change in the universal credit regulations is essential to facilitate payments on a RTI basis, yet we have heard little from the department on this matter.”
Visit HMRC’s website for exceptions to reporting PAYE information 'on or before' paying an employee.