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RTI watch: HMRC moves to calm RTI pilot penalty fears

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30th Apr 2013
Editor at large AccountingWEB
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As the volume of RTI traffic surged at the end of April, AccountingWEB was swamped with rumours, warnings and panics about the new real time information (RTI) regime for PAYE. This digest provides a quick overview of the latest developments.

30 April - HMRC moves to calm RTI pilot penalty fears

HMRC provided clarification over RTI pilot penalties and late year-end returns after a number of AccountingWEB members set alarm bells ringing last week.

After discovering that under RTI the deadline for submitting year-end returns was 19 April rather than 19 May under the old system, AccountingWEB member Kazmc  assumed that as there would be no penalties for the first year of RTI, FPSs could be submitted late. But when they tried to subit month 12 FPSs and the end of year declarations, they had missed the 19 April deadline.

Sage advised Kazmc that the only way around this was to give HMRC a list of all the payrolls affected. Then when the EYU [Earlier Year Update] facility is available, the employer will have 14 days to submit everything via the government gateway. If this does not happen, late filing penalties will apply.

Other AccountingWEB members reported similar problems - particularly if you're depending on HMRC's EYU tool, which won't be ready in time. “The deadline for informing them that you'll be late because of the delay with the tools is 19 May though so you could wait until it's a little quieter to contact them,” Onicholson suggested.

* * *

30 April - How to escape the involuntary RTI pilot trap

New PAYE schemes put into the RTI pilot scheme without being told face extra filing problems in May.

“We’re encountering many situations where people didn’t know they are on RTI,” warned Tom McClelland of payroll software developer 12Pay. AccountingWEB member Jean Reeve reported that a scheme set up back in October had its P35 rejected, and several other members had the same experience, including David2371, SarahP, E Lewis and cathyne.

“Now that the 19th of April has passed, under RTI they can only file an earlier year update (EYU), a file format that HMRC  itself can’t handle yet, nor several leading payroll software suppliers,” he noted.

“We’re worried large numbers of people will discover they have been on the RTI pilot all along. Quite a lot will discover on 19 May that their RTI filing is late, and they’re already a month into potential penalties.”

HMRC tried to allay these concerns by explaining how companies caught in the situation can comply (see item above). If you have missed the 19 April deadline for filing a full payment submission with the “final payment of the year” indicator set, you can file the EYU under RTI, or ring the new HMRC employer helpline (0300 200 3211) and ask them to reset the scheme’s RTI commencement date to 6 April 2013.

* * *

29 April - 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.”

Annual schemes are a useful option for one-man limited companies, with reports that SJD, a leading adviser to contractors, submitted thousands of requests to switch its clients. More details here.

* * *

29 April - Many employers still don't know what to do

HMRC needs to do more to educate small employers on the ins and outs of RTI, according to CIOT technical director Tina Riches

Recent Any Answers queries on AccountingWEB and feedback from payroll software developers indicate that as real time information (RTI) reaches the end of its first month of official use, non-compliance is widespread. Many small employers will continue paying students and casual workers cash-in-hand without reporting it, accountants warned.

Riches called on HMRC to do more to help small firms understand RTI rules. “We have been in contact with a number of small businesses not connected to an agent. While awareness is increasing rapidly, the problem is some people don’t know what to do,” she said. “Under RTI, if someone has a PAYE scheme set up for employees who pay NI and PAYE, they must file RTI submissions for all employees, including those who don’t need to pay that tax. I don’t think this message is getting through to smaller firms.”

While penalties for late filing will not be introduced until April 2014, as announced in Finance Bill 2013, penalties for filing accuracy will come into force from July.

* * *

26 April - Month-end crunch looms for RTI

Alexander Meynell, commercial director for ICAEW-endorsed Bacs services provider CreDec, told AccountingWEB that the final few days of the month would be "real acid test" for the new PAYE filing regime.

“HMRC reported that it had handled 70,000 submissions in week one of the new tax year. That’s 3.5% of the total," he said. “Were RTI not to perform and government gateway has a collective heart attack from the 30th when it is hit by this surge of reporting, in due course HMRC will send out letters. The recipients will call their accountants and payroll providers and want to know what happened,” he warned. "It puts the profession in a very, very uncomfortable position.”

Rebecca Benneyworth and the CIPP's Helen Hargreaves were less concerned about the meltdown threat.

RTI resources

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Replies (36)

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By steve 12321
30th Apr 2013 14:39

This RTI is a very expense exercise

This is cost businesses (small ones) lots of money.  Everything to do with HMRC is so hard.  You cannot get through to departments. The telephone menus cover too much, are too long and a it is so hard to achieve what you set out to do. I am losing the will to live.

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Replying to ireallyshouldknowthisbut:
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By david5541
29th May 2013 12:40

The telephone menus cover too much, are too long and a it is so

......hard to achieve what you set out to do. I am losing the will to live 

maybe its time you hired an accountant to run RTI for you steve

steve 12321 wrote:

This is cost businesses (small ones) lots of money.  Everything to do with HMRC is so hard.  You cannot get through to departments. The telephone menus cover too much, are too long and a it is so hard to achieve what you set out to do. I am losing the will to live.

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By P2
30th Apr 2013 15:01

Real Time exchanges - all "one way"?

I thought regular readers would be amused to hear about a recent experience of ours.  We are a payroll agency and have diligently prepared well in advance for RTI submission in April.  As of today April 30 2013 all our employers have complied fully with everything they were asked from us.  April represents a great challenge but also a successful achievement from both our clients and our own point of view and daily submissions have all been successful.

How "amusing" (not) then to receive a notice through our letter box on Saturday morning, APRIL 27th 2013, from HMRC and DATED FEBRUARY 23 2013, telling us we'd better be diligent and start preparing for Real Time Information exchange of information or else!

Any similar stories to tell?

 

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By steve 12321
30th Apr 2013 15:26

DELETED

They deleted me. For no reason, they closed my PAYE scheme. Pleased to hear it was not my fault!  So that is what the error codes mean (despite the misleading details)!  3001 and 7806 - watch out for these ones - on-line helpdesk told me - so I now have to go the process of ringing the employer helpline and asking if it can be re-instated. 

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Replying to chatman:
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By facucvivas
01st May 2013 11:59

Deleted schemes

steve 12321 wrote:

They deleted me. For no reason, they closed my PAYE scheme. Pleased to hear it was not my fault!  So that is what the error codes mean (despite the misleading details)!  3001 and 7806 - watch out for these ones - on-line helpdesk told me - so I now have to go the process of ringing the employer helpline and asking if it can be re-instated. 

 

I had the same thing happened with 3 clients, with error code 7802 "you have not been invited to submit this submission type". I called HMRC employers helpline and they said that all 3 schemes had been closed by HMRC. 2 of the 3 schemes could not be reinstated as they had closed them at the end of the previous tax year

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Replying to SteveHa:
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By steve 12321
01st May 2013 15:59

Re-instating scheme

I was told mine had been closed 5/4/12 but they could email another department who could re-instate it in 2 -3 weeks.

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By Alib
01st May 2013 11:37

HMRC staff are giving out very confusing messages

Spent 45 minutes on the phone to them earlier this week, spoke to three different people via the helpline, none of whom seem to have read the advice on HMRC's website about the delayed EYU tool.

Although one of them did say 'I can't see there being any filing penalties this year'

 

 

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By Annetax
01st May 2013 11:58

Administrative nightmare

Let me be honest - I don't work directly in payroll so to some extent I am watching RTI from the sidelines.

All I know is that it is causing our payroll staff massives headaches. There are so many questions that lack answers or are answered with different solutions depending on who you talk to. Even ones that seem, to us at least, to be obvious/common issues for many of our clients. RTI is time consuming and, as far as I can see, will increase the workload for client and advisors alike. Not to mention the Revenue, who will have far more problems to sort out due to the complexity of it all and probably don't appreciate how many problems agents actually deal with behind the scenes while the Revenue get their act together!

I also have concerns as a Tax Advisor, mainly to do with P11D benefit reporting, which seems to have been very poorly thought through, at least under the current system. Maybe it's an excuse for future change there!

I'm sure in time there will need to be a lot of changes to the system over time but a lot of grief in the interim!

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By Char
01st May 2013 12:08

New PAYE schemes

More amusing is the fact HMRC have not yet issued details of new schemes set up in the new tax year where first payment to employees was for the end of April!  Having realised without the details, RTI submissions would be impossible, I contacted HMRC over it.  I was informed they have a backlog and as such the scheme information will be late.  The RTI submissions will have to be done ASAP after the information is received by the employer and no penalties will be raised in such instances.  There is no official guidance surrounding this situation, nor was the guy on the Employers Helpline (or any manager) willing to put this into writing. 

So from this I assume the RTI applies when it can apply?!

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By Ian McTernan CTA
01st May 2013 12:34

Another fine mess...

I'm about to do my end of year stuff for last year, and have just discovered that one of my new employers was 'volunteered' onto RTI last year- this is the first anyone knew about it.

So he's late....and I'm not spending an hour on the phone trying to get through to HMRC to deal with it- who exactly do I charge for that time??  Multiply that by the number of payroll I deal with, where do i find that time and who do I charge?

HMRC seem to think we have all the time in the world to deal with this mess, and now they won't even let me switch to annual schemes for my one man companies that get paid £7400 per annum (into their loan accounts, most take money out when they need it/when the company has the funds available) and took 10 minutes each to deal with as end of year returns using HMRC's inline filing tool.

What's really amazing is this issue was highlighted months ago and rather than address it BEFORE RTI came in they ignored it, and now we have one almighty mess.

Of course when they survey big companies to illustrate how successful RTI implementation has been, it will say '98% of employees were recorded successfully in the first month of operation', as of course the 500,000 employed by the NHS went through smoothly...

I'm tempted to let HMRC' s system close all the one man payrolls down automatically and then just report the salary in his Tax Return and in the company accounts, then when they finally send me a letter saying 'we believe this company should have been completing RTI Returns here's a fine, penalties etc' I'll point out it did, and they closed it down, and there is no tax loss, and their system completely fails, and see if they want to have it heard by a Tribunal and the publicity it would generate.

Tempting...but probably I won't , can see problems with it from a professional standpoint.

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By Ermintrude
01st May 2013 12:40

PAYE Dept.

I'm very happy that I have outsourced my payroll function.

I do however have a PAYE unfair late filing penalty for a client from 2010-11 which I had assumed was sorted, now it turns out hasn't been, and out of the blue client getting threatening notices about recovery.  I'm waiting for pack to come to apply to tribunal.

However, this experience and others similar have brought home to me just how awful, chaotic, and unreasonable the PAYE section is.  I have had no issues at all with self-assessment or corporation tax - yes maybe delays and errors, but when subsequently pointed out have been put right.  They read my correspondence, and reply accordingly.

PAYE though - their responses make no sense!  Its like they won't back down no matter what!  Plus - they sent the response to me privately, not my firm that is the registered agent, and to my old home address!

Good luck to you lot anyway!  If you would like the details of my calm, competent and inexpensive payroll bureau contact, just ask!

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Locutus of Borg
By Locutus
01st May 2013 12:46

@Ian McTernan

 

"I'm about to do my end of year stuff for last year, and have just discovered that one of my new employers was 'volunteered' onto RTI last year- this is the first anyone knew about it.

So he's late....and I'm not spending an hour on the phone trying to get through to HMRC to deal with it- who exactly do I charge for that time??"

 

I had exactly the same problem. I only found out when I couldn't file the P35 under the old system. I thought the pilot only applied to those employers that actively opted in.

I managed to file the P35 after 19 April using HMRC's PAYE Tools, so I'm left wondering whether my client will be fined £100 for this "late" submission.

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By ralan
01st May 2013 12:55

Time costs

Yes the time taken to get this RTI up and running is just getting ridiculous and clients will not want to pay the extra costs, so much for saving £300m

 

Just had the April RTI submission for a client rejected because Paye or Accounts Office Reference incorrect. When I spoke to Online Services they said Acts Office Ref was wrong and they would only be able to send out details by post and could take 2 weeks. I asked if the number we had was "close" as we had been using it every year to do year end filing and it had never been queried, his reply was it was not close and he would not comment on why it had not been picked up before.

 

Had a search in some earlier files after getting them from storage and found there was only ONE digit missing from the number.

How unhelpfull can these people get????

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By CJMaslen
01st May 2013 13:12

First RTI Submission

I prepared my April payroll early in order to allow for any problems, using HMRC basic tools package for the first time..  All went OK (though mush more time consuming than 2012-13 (not in RTI).) until I tried to submit the details. The submission sat at the initialising stage with no response.. I called the helpline - held on for ages, during which I listened to a standard message saying that some employers were experiencing difficulties with submissions using HMRC basic tools package.  I held on until I was able to speak to someone, who told me that the problem would be sorted out "early next week" and I should leave the submission open and wait for the problem to be resolved.  That was 10 days ago.  The standard message was still on the helpline last night.  So far, the first attempt to submit under RTI has taken longer than the whole of my payroll compliance for the previous year.  And I still have not been able to make my first submission.  And although I prepared it early, it is now late!. Hutber's Law:  Improvement means Disimprovement.                          

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Replying to bettybobbymeggie:
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By warmglow.co.uk
01st May 2013 15:50

First RTI Submission

CJMaslen wrote:

I prepared my April payroll early in order to allow for any problems, using HMRC basic tools package for the first time..  All went OK (though mush more time consuming than 2012-13 (not in RTI).) until I tried to submit the details. The submission sat at the initialising stage with no response.. I called the helpline - held on for ages, during which I listened to a standard message saying that some employers were experiencing difficulties with submissions using HMRC basic tools package.  I held on until I was able to speak to someone, who told me that the problem would be sorted out "early next week" and I should leave the submission open and wait for the problem to be resolved.  That was 10 days ago.  The standard message was still on the helpline last night.  So far, the first attempt to submit under RTI has taken longer than the whole of my payroll compliance for the previous year.  And I still have not been able to make my first submission.  And although I prepared it early, it is now late!. Hutber's Law:  Improvement means Disimprovement.                          

Exactly the same for me. Although up to that stage I found the HMRC software much easier to use than Iris or 24Pay.

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Replying to bettybobbymeggie:
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By kjevans
03rd May 2013 15:25

Unhelpful error messages

I had the error message about incorrect accounts office reference. I knew it was correct but it turned out that it is case sensitive. I had been using lowercase letters for years and never been rejected. Changed to upper case and everything went through. Did the error message mention case? No. Just something about not matching the pattern.

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Replying to bettybobbymeggie:
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By George1234
03rd May 2013 17:23

Same issue

For my clients and my own business. I wonder if it has something to do with storing the payroll database in the cloud.

Anyway, there's a post on HMRC website about it here dated 25th April:

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageOnlineServices_ShowContent&id=HMCE_PROD1_031142&propertyType=document

Frankly, after the metaphorical ear-bashing I've received from HMRC to "BE READY FOR PAYE RTI !!" the fact that they aren't even ready is mildly amusing, if not ironic.In any event, I certainly won't be wasting billable hours troubleshooting their problems for them!

 

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By ireallyshouldknowthisbut
01st May 2013 13:43

3001 and 7806 errors

This is the one when they closed the scheme on the 1st April 2012 having apparently (not that the letters ever arrived) notified the chosen employers of this in November 2012.

The standing instruction seem to be to open a new scheme.

I have two payroll who are affected by this, however it just doesn't stack up:

1. We have filed 2012/13 under the old system, which would not have allowed it if the scheme really was closed in April 2012.

2. No letters have ever been issued to agent or client (a bit like the 'voluntary' RTI scheme for 2012/13)

3. Why cant the old scheme just be opened? I was told this was because it was closed more than 12 months ago - apart from the fact it clearly hasn't as we filed 2012/13 and the letters were not sent until November 2012.

4. The ones we have had closed are not 'special cases' they are just director's payrolls with no tax or NI, we have oodles of those

5. If we do open a new scheme, how do we file leavers on the old scheme given it doesn't exist?

I am concerned in particular that if we apply for a new scheme, by the time we have done so I will have ended up with is TWO schemes and a stack of penalties. Any which way we go with this seems like a disaster.

 

 

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7om
By Tom 7000
01st May 2013 13:57

wing winge winge

300 clients at £500 a year for rti =£150,000

less one clerk on minimum wage hammering em in  ( £12k) ...who gets all the grief incidentally... and its all through the new payroll company so no vat and ringfenced  liability if it all goes wrong

that pays for the new Bentley then..

Waitress pass me another glass of Krug

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By e.anfield
01st May 2013 15:04

Good news on RTI filing

I would just like to report some good news

 Why use the Revenue's software when for a little over £100 you can get software that will let you file for as many companies as you like with up to 100 employees per company?   I deal with 3 payrolls each with just one employee.  The software I have used for several years and really liked told me I had to have separate software for each company so it would have been ridiculously expensive but I was told about the new software by a delegate on an rti course.

You need to have the clients signed up as clients under your payroll agents reference.

It was a little fiddly to find where the agency online filing details had to go into the software and the employer and employee data had to be re-imputted(not a big job for just 3 clients)but the rti submissions went through without a hitch yesterday.  The process took no longer than an additional click compared with payroll last year.  By-passing the Revenue's clunky software makes a lot of sense

I appreciate that if schemes have been closed , this won't help you

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By levelheaded1903
01st May 2013 16:06

anyone know??

similar to some recent posts, I had a client who, didn't earn anything through his PAYE scheme during 2012/2013, so I sent a "no p35 required" submission to HMRC, before 19th April. Then, he found a letter which had invited him onto the pilot, but as I say, had no earnings anyway. Just wondering if anyone has any views on whether this should be ok, yes, Ill ring the helpline but not looking forward to that, as I don't think anyone will be able to give me a firm answer

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By John Wheeley
01st May 2013 16:14

RTI : No Problems Encountered

I am very pleased to report no problems at all with RTI (9 payrolls), just a few extra buttons to click after running the payroll (all on Moneysoft Payroll Manager). The software does the work for me.

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Della Hudson FCA
By Della Hudson
01st May 2013 19:51

@Ian McTernan

We had a client "volunteer" too. As I personallt set up the payroll scheme and new that our software wasn't ready at that point I know that I didn't volunteer him for any such thing.

Anyway just rang HMRC on the employer helpline above. Got straight through to irritating guess-the-number system and, after pressing a few numbers, I nearly dropped the phone in surprise to be answered immediately by a real person. Explained the problem and HMRC lady volunteered to move start date to 6 April.

I have no complaints about the way HMRC dealt with the problem (assuming that change really is effective in the next 48-72 hours as promised)

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By terry morris
02nd May 2013 09:50

Terry Morris

After reading through the comments I understand how frustrating this system can be eg: You can not set up a new paye scheme for 2013/14 until 6/4/13 and then we had the Inland Revenue Internet down until the 10th.April. I set up 2 new schemes on 11th and to date have not received any details. I telephoned only to be told after 69 minutes waiting that neither scheme had been set up so we had to go through the process again. One of these schemes was for 3 monthly and 1 weekly employees. To date 4 rti submissions are late, next April fines kick in ????.I note that in one of the above comments the Inland Revenue uses the word error for one of their mistakes. In 2008 I transposed a tax figure and ended up with a £250 fine.The word error is not in the Inland Revenue manuals, it is negligence. Surely this should work both ways.                                                                                                                                              On the payroll RTI issue I use Moneysoft and to date not a problem. Low cost easy to use payroll program with friendly staff on the limited occasions that you may have to telephone.

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By sbt
02nd May 2013 12:08

HMRC can fix it
I just had the same issue where we couldn't file a P35 as RTI submission was due.
A quick call to HMRC and as client was "invited to join" they can amend the start of RTI to 6/4/13 so a normal P35 can be submitted for 2012/13. Takes a could days to update so all fine.

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By chrisowen
02nd May 2013 15:37

hmrc basic tools mis-calculation

My only payroll is a charity, with 2 employees on BR tax code.

I downloaded HMRC's basic RTI basic paye tools. When it came to the first submission at the end of april, It calculated the tax for employee 1 correctly. However, for employee 2, on a gross of £424.66 it calculated the tax at £84.80 instead of 20% £84.93.

There's no option to correct, so I had to submit it with their figure.

So what do I do about the underpayment ?  I am loathe to spend time contacting HMRC on such a trivial amount.  Has anyone else had this ?

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By daveforbes
02nd May 2013 16:17

It is correct

£84.80 is the correct amount in the BR tax table. Did you follow the rounding rules correctly in your manual calculation ?

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By P2
02nd May 2013 16:19

PAYE rounding

Just to respond to the question immediately above...

PAYE and coding notices often result in rounded figures in relation to tax deductions.

 

Next month (on the same gross pay) you might find you get a figure of £85.00 - i.e. compensating the other way.

You need not worry too much about this as things "even out" over a twelve month period.

Do others agree?

Best wishes

P2

 

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By daveforbes
02nd May 2013 16:35

might?

Yes, at that gross pay over time it will be either £84.80 or £85.00 each month, with slightly more of the latter. Next month it will be £85.

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By chrisowen
03rd May 2013 10:35

Thanks to the respondents above.  Didn't realise tax tables were still in use. I last used them in the 1980's !  I can sleep well now.

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By CJMaslen
03rd May 2013 14:37

First RTI Submission

My first RTI submission has been sitting in the initialising screen now since 23 April.  I was originally told when I called the helpline that there was a problem that was being resolved and that it would eventually go through as a submission.  I telephoned the helpline again this morning, to be told that I should download an updated version of the basic tools and then re-enter all the payroll details for April.   The explanation was that the tools as originally supplied called for too much system capacity and the requirement had now been reduced.  Has anyone any helpful comments or advice?.                                                                                                   

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By CJMaslen
06th May 2013 00:18

First RTI Submissiom

Thanks, George 1234.  As you say, after so much blather from HMRC about being ready for RTI it is tiresome in the extreme to have to comb their website to find patches because they were unprepared..

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By antony norris
06th May 2013 10:19

decent software

Qtac (based in Bristol) - software I have used for many years due its flexibility - has made rti easy

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By CJMaslen
07th May 2013 10:02

First RTI submission

Thank you, Antony  I clearly made a mistake in trusting that HMRC's basic tools would be up to the job. As my payroll is small, I naively thought that Basic PAYE Tools was the answer.   I did not want to incur software/ outsourcing costs  for a mundane task that has in the past been completed in minutes by a secretary.  My predicament must be shared by many small employers.  If the problem is not resolved by HMRC I will have to change to a less "clunky" offering and will bear Qtac in mind.  Thanks again.

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By George1234
07th May 2013 16:14

Submission problem fix

No problem CJMaslen, there is a fix to this on the link below:

http://www.hmrc.gov.uk/payerti/troubleshoot/bpt-initialising-submission.htm

The problem is with custom installing the software to a non-standard location. The software only looks in the standard directory location for submission data.

 

 

 

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By CJMaslen
08th May 2013 09:16

First RTI Submission

Thank you, George1234.  I will ask my technology guru to have a look at this .  It appears to be the answer, but I will have to be sure that using "standard" rather then "custom" installation would not cause problems with the automatic backups already in place for my data.  I do appreciate your interest.  CM

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