TheInstituteofChartered AccountantsinEnglandand Wales (ICAEW) has warned that many small businesses will find the new PAYE real time information (RTI) reporting system “impossible” and that it will add to their administrative burden.
According to the ICAEW, the requirements demanded by RTI are at best unrealistic and at worst, impossible for small and medium-sized enterprises (SMEs), which it describes as “the lifeblood of the UK economy” and this is despite HM Revenue and Customs (HMRC) recently relaxing a number of previously decreed RTI conditions.
Currently, employers have to deduct income tax and national insurance from their employees’ wages and pay HMRC either monthly or quarterly, whereas under RTI, an electronic return will have to be made to HMRC ‘on or before’ a payment is made to an employee, which has been described as the biggest change to PAYE in decades.
If the return is not made on time then the employer is potentially liable for penalties. There have been concerns expressed that while complying with the RTI requirements may be relatively straightforward for larger businesses, many smaller businesses will find it difficult and sometimes impossible to cope with.
HMRC is now proposing extra time for employers in some cases but this would only be an extra seven days. The ICAEW has called for employers to be required to file monthly, as it says that the ‘on or before’ rule ignores the way the real world works.
The Institute is proposing that there should be a single RTI return on the 19th of the month following the month of payment, as that is the same as the normal PAYE due date, so is familiar to anyone with a payroll system.
As an accountant, Simon Denton specialises in providing PAYE advice, support and guidance.