RTI may trigger more winding-up orders
Keith Steven, turnaround expert and managing director of KSA Group warned that the introduction RTI may lead to an increase in winding-up order petitions.
The gloomy scenario will come true, he explained, if companies don't start being honest about paying PAYE and employ good cashflow practices.
Speaking at the Turnaround in 2013 event in Bristol recently, Steven highlighted the cashflow difficulties RTI would pose for some small businesses.
"We work with some companies where there is evidence of understating PAYE each year," he said.
"HMRC don't find out until year-end when they file their P35 and then there is a discrepancy. The company then applies for a time-to-pay deal with HMRC and they have some leeway to pay the outstanding PAYE," he added.
Under the new RTI regime, employers will have to reveal their PAYE figures whenever a payroll is run and pay the outstanding tax by 19th of each month.
"Under the new regime, my understanding is you won't be able to do this anymore," Steven continued.
"If you lie about the submissions, what will HMRC do? If you file the PAYE due and the money isn't in your account, what's going to happen then? Sometimes companies in difficulty need to make decisions between paying wages, suppliers and PAYE and often PAYE comes last."
In Finance Bill 2013 consultations the government toyed with the idea of merging filing and payment requirements, saying the submission of a return should trigger a payment, preventing employers from using their PAYE as a cashflow tool.
But they rejected this for now, saying it was a step too far at this stage, as HMRC does not want to make too many changes to the PAYE filing system at once.
Steven also said HMRC's RTI communication regime was lackadaisical towards directors and staff outside payroll departments.
In November, the Federation of Small Businesses released figures showing that a quarter of small businesses were unaware RTI even existed.
The insolvency practitioners urged businesses facing potential problems with RTI to get in touch with HMRC.
"I would advise those with concerns or who employ these practices to speak to HMRC now. Try and find out what's happening and find out the implications of late payment. Find out how the payment is going to be made and when it's going to be made and employ good cashflow planning in your business."