A TREASURY SUB-COMMITTEE session on the administration and effectiveness of HM Revenue & Customs flagged up "enormous problems" with the real-time information programme for PAYE.
Due to commence from April next year, RTI will see employers updating their PAYE records as and when changes occur, rather than at the end of every tax year.
However, despite HMRC claims that the pilot scheme currently underway is proving successful, witnesses called before the committee warned the initiative could experience significant problems, particularly with small businesses making monthly payments.
In its current guise, RTI would require income tax deductions and national insurance contributions to be paid "on or before" the pay day. But ICAEW tax faculty chairman Paul Aplin told MPs enforcing that rule as "absurd", while Robin Williamson of the Low Incomes Tax Reform Group predicted "enormous problems" for small companies making online submissions.
He added that there is "a mismatch" between what is expected of taxpayers and the help and guidance they are given by HMRC.
The morale of staff at the department was also discussed, with Peter Lockhart of PCS Revenue & Customs Group calling for "proper investment" in HMRC after he and his co-witnesses had described the decision to reduce staff while expecting higher tax yields as "absolutely illogical".
"There's a logic there ... the more that's invested in HMRC, the more you get back", he said.
Concern was raised that 4,000 temporary staff are currently working at the department, to "plug the gap" left by "natural wastage" such as retirement and staff taking other jobs.
However, president of the Association of Revenue & Customs Gareth Hills noted that recruitment had not been impeded by poor morale or the "corrosive" effect of negative media coverage, having taken on more than 200 graduates over the last year.
Maybe I've misunderstood the author, but I believe its the net pay that has to be paid on or before the pay date, not the tax and national insurance !
Posted by: Richard, 26 Oct 2012 | 11:10
Someone somewhere has their facts wrong. Surely the tax and national insurance deductions have to be reported on or before the pay day, not paid. The date for payment remains the same ie the 19th of the month following the end of the PAYE period in question.
Posted by: Paul, 26 Oct 2012 | 13:43
I'm sure it is edintorial writing, the challenge is that the PAYE and NICs to be paid later has to be calculated and reports on or before the employees pay day. That is not possible in many situations.
Posted by: P Simon Parsons, 26 Oct 2012 | 17:29
I think the pay date being referred to is the paydate for PAYE& NI - i.e., 19th Of following month.
What is a greater problem is a majority of micro businesses do not have a payroll at all. From my experience, owners/proprietors only become aware of their drawings when the accounts are prepared and then part of it is then declared as salary - the rest taken as dividends or profits. Other staff are typically paid say £150 per week or £30 per day cash in hand and then again at the end of the year the appropriate tax calculations done and the round sum payments to HMRC which were made quarterly are adjusted to actuals at the end of the year.
Have HMRC really considered the impact of RTI on theae busnesses when it is saying there is no increased administrative burden being forced onto business from these proposals.
Posted by: Peter, 29 Oct 2012 | 16:01
There is no need for businesses to be worried about the real time information (RTI) PAYE mandate – they just need to be prepared.
First, businesses need to audit employee information as any RTI submission will be declined if employee and company details are incorrect.
Secondly, companies need to find out how their payroll provider can help with the transition onto RTI. Of course, if the provider is not supporting RTI this is not very helpful, but it is far better to find out now, rather than the day before the Government deadline.
RTI isn’t a mystery. Businesses just need to make the most of free resources and learn about what they are required to do now rather than later.
This comment has been moderated
Posted by: Mark Paraskeva, CEO SME Division, IRIS Software Group, 29 Oct 2012 | 17:35
I recently asked this question at an RTI event ran by HMRC Agent Account Manager service. It was stated that the payment too HMRC will not change as it is now - It is when an Employer pays an employee the 'information will be sent to HMRC on or before payment is made to the employee.'
Posted by: mj, 30 Oct 2012 | 09:59
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