REAL-TIME PAYE information (RTI) is a good idea. Generally speaking.
The principle that ‘up-to-date' PAYE payments will help to smooth out tax anomalies is fine. But how many times have we said this: ‘the devil is in the detail'?
Vince Cable's business department sends out press releases on a seemingly daily basis about cutting red tape and easing the reporting requirements on small business. But concerns from advisors about the burden RTI will place on SMEs suggests that the government is taking one step forward and two steps back. Perish the thought that BIS and the Treasury aren't joined up on this initiative.
Today has seen some concession – small businesses will have a week to get staff data across to HM Revenue & Customs.
But, as advisors such as Paul Aplin point out, do we really want a situation where some businesses will now have to collate and send data 52 times a year to HMRC, rather than 12?
HMRC chief executive Lin Homer told the Public Accounts Committee last week that there is no alternative plan for HMRC beyond RTI – besides trying to get ahead of its own schedule.
So while an RTI pilot has been running for a while, it's definitely coming into force a lot faster than 'leisurely'.
Concerns remain about the taxman's ability to deliver the system, while advisors at the sharp end foresee big problems for their clients.
As with the construction industry tax scheme in the mid-noughties, the taxman will have to take on board the growing concerns that more time is needed to make sure this works for everyone.
Put it off a year. HMRC won't get the same stick for doing so compared to what it would receive if this was to fail.
Kevin Reed is editor of Accountancy Age
The proposal to implement RTI is deeply flawed on at least two major points.
1 - This imposes significant additional costs on very small businesses.
I prepare payrolls manually for 7 businesses, covering a total of 12 people. This takes under an hour a month. If I have to log in to HMRC and report these each time then there is probably a day a month committed to the task. Who will bear the cost?
2 - Not everyone has access to fast broadband. In the area I live - co-incidentally the county from which Broadband is administered - we are lucky if we can get a connection speed above 0.5Mb. This adds further to the time taken for access to any of the HMRC processes.
I believe that part of the reason for this poorly thought out move to online reporting is that those making the decisions are based in large cities where it does not occur to them that the real world outside the M25 may not have an acceptable level of infrastructure.
This is compounded by the fact that much of their advice is drawn from employees of the "Big Four" whose knowledge of small businesses could be conveniently be written on the pack of a postage stamp.
Posted by: Alan Scott FCMA CGMA, 13 Nov 2012 | 10:03
I think Alan Scott is over-estimating Big 4 staffers' knowledge of small business. Unless you use their own definition of small which probably stops at 1,000 employees.
Posted by: Edward, 14 Nov 2012 | 11:30
Broadband speed is not dependant upon the area where you live, but on the broadband supplier. Do some more research of different suppliers.
Posted by: Laurence Hoppen, 15 Nov 2012 | 13:58
I respectfully disagree with Laurence's comment. In rural areas the sole supplier of local loop services is BT Openreach and all providers of broadband are constrained to their limitations. At present this area is offered a MAXIMUM speed of 1Mb.
Mobile signals are not a realistic alternative as coverage is patchy.
I am not is a particularly remote area - South Suffolk is within 60 miles of Central London.
Posted by: Alan Scott, 17 Nov 2012 | 23:29
I am not an accountant, but a small retailer in Cardigan, West Wales, who pays four part time staff each Saturday. I use a well tested spreadsheet set up to calculate correct pay and pay slips etc, and enter the HMRC PAYE data during a quite spell at home the following week (or two!)
What happened to the great Election promise of cutting red tape for small businesses?
It appears I am now expected to go on-line Real Time, fifty two times a year for each employee. Often with slow rural upload speeds.
Worse.... what happens if I go on holiday leaving someone in charge who won't be familiar with the HMRC software? Am I to be fined for late submission when we return?
As to broadband speeds, without wishing to be rude to Lawrence, I agree 100% with Alan Scott. My daughter and family live a few miles from Brecon, and have top BT speeds nearer 0.3-0.5mb some days, so do all the farmers around them. When the family visit me, they think my 3-4mb is the "Superfast" broadband they read about.
I accept the reasons for more frequent reporting, but HMRC should at least allow small employers to make one return a month, instead of every week.
I found this useful page whilst searching fruitlessly for any practical tutorials on the pending "Real Time" so I can see just what we are going to be in for next year.
Any useful suggestions welcome!
Posted by: Mike, 19 Nov 2012 | 23:23
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