HMRC puts RTI annual scheme requests on hold
HMRC has temporarily stopped employers and their payroll agents from switching their pay cycles to lessen the administrative burden of RTI.
In new guidance published on its website today, the tax department explained, “There has been a recent increase in the number of employers and agents requesting the registration of PAYE schemes as annual.
“Please note that, at the moment, HM Revenue & Customs (HMRC) are unable process requests from employers to:
- move to paying annually and register as an annual scheme
- change their payment frequency.
“HMRC are working to rectify this position and will publish a further 'What's New' message to announce when this is ready.”
Crunch Accounting flagged up the guidance in a tweet at 3pm this afternoon that noted, “So many contractor accountants have moved to annual PAYE schemes to avoid RTI that they've broken HMRC.”
According to Crunch web editor John Norris SJD Accountancy, the biggest specialist serving freelance contractors, decided to move all of its clients to annual schemes and submitted thousands of requests to HMRC.
The annual scheme option has also proved to be a popular approach among AccountingWEB members, who have discussed it in multiple RTI threads in recent months.
In her latest Intuit-sponsored RTI implementation guide, Rebecca Benneyworth explains that annual schemes are particularly useful for companies with a single director. Under this option, the employer states the month in which the payment is to be made and files an FPS for that month only, saving them the need to file EPS nil returns or inactivity reports for the remaining months of the year.
This route has proved to be such a popular option for one-man limited companies that AccountingWEB understands the department has been flooded with requests.
“I get the impression they’re having a problem with the IT,” said Benneyworth. “I know that they realise how important the annual scheme process is and are intending to get that sorted as quickly as they can. In the meantime they advise submitting nil EPS for April and May 2013.”
The HMRC online notice explained that some requests did not meet all of the requirements for an annual scheme. Benneyworth explained, “You can’t have a mixed scheme in which some are annual and some not.”
To qualify as an annual scheme, HMRC stipulated that:
- all the employees are paid annually
- all the employees are paid at the same time/same date
- the employer is only required to pay HMRC annually.
“We’ve heard that HMRC can’t cope with the volume of requests and has closed the helpline number down while they decide what to do,” one payroll software developer told AccountingWEB.
“We’ve had multiple queries from one-man director companies who don’t understand nil EPSs and when they have to do them. The solution is to either put them on annual schemes or do multiple EPSs, which would be a burden on them.
“HMRC could consider a concession in which companies with fewer than five employees could be let off the requirement to file EPSs.”
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AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.