TaxCorporate TaxReal-time PAYE timetable remains too tight

Real-time PAYE timetable remains too tight

The government's response to the real time information consultation makes few concessions to the critics of its short timeframe

THE MOVE to real-time information (RTI) came closer last week with the publication of HM Revenue & Custom’s response to its latest consultation.

The initiative will lead to PAYE tax information being sent to HMRC when employers run their payroll rather than at the end of the tax year. This has been welcomed in principle by advisors and employers on the whole, despite added software costs.

But there have been huge concerns over the timetable of the implementation – is it too tight considering the scale of the exercise. The government has said that all employers will have to move to RTI by October 2013. This is because its flagship welfare policy, the Universal Credit – designed to simplify the benefits system – relies on RTI to calculate government support for individuals.

This has left little room for error: the test system will run from April 2012 to March 2013, initially with a small number of employers. The system will be adjusted and from July 2012, will be rolled out to more volunteer businesses. Regulations will require all remaining employers to be brought into RTI between April 2013 and October 2013.

The tax community has been vocal in denouncing the tight timetable. The CIoT has consistently doubted whether there can be a smooth transition in such a timeframe.

This was reflected in the responses to the consultation – which numbered a huge 187, with a high number of software developers, payroll bureaux and employers. “Of those respondents who expressed a view on the proposed timescale for the introduction of RTI as set out in the consultation document, 75% thought it unachievable,” the summary of responses said.

HMRC’s concession to these fears was that only volunteer software developers would need to develop software by April 2012, as opposed to all developers, and only volunteer employers would have to implement it.
But, importantly, the deadline for all employers remains October 2013.

“The timetable for the introduction of Universal Credit means there is no flexibility in terms of the ultimate go-live date of RTI,” the HMRC document states. “HMRC’s priority is therefore to migrate the largest number of employments (sic) into RTI as quickly as possible – a necessity for the introduction of Universal Credit – whilst putting in place a migration approach which will protect the overall robustness of the system.”

The government has downplayed concerns about the timetable. The Universal Credit is the flagship policy of Iain Duncan Smith, the work and pensions secretary, and he said this week that he would take “personal charge” of the project. However, he said that the IT side of the project “did not represent major change”. “We’re not doing it all as a big bang. We’re not migrating everyone across at once,” he added.

The concerns remain, however. John Whiting, technical director at CIoT, said that the sheer number of respondents who doubted the timetable should provide food for thought for HMRC. “Given there are a good number of responses from employers and software providers, there is a good number of people who know about this who are saying it is unachievable.”

Whiting is “not sure how much help there will be from changing the pilot”.

Peter Bickley, technical manager at ICAEW, said that there has already been problems in sticking to the timetable. The technical specifications for the software providers was due to be produced in March this year, but was not released until May. “Much as I would like RTI to work, I am still a bit apprehensive,” he added.

Chas Roy-Chowdhury, head of tax at ACCA, said that the project is bound up with the Universal Credit, and there does not seem to be much appetite in changing its implementation date. “It might have been easier to set the Universal Credit timetable after RTI, he said, “but we are where we are.”

It is not all doom for HMRC. The initiative as a whole is still popular – 67% of respondents felt that RTI was a better system. This is a view that both Whiting, Bickley and Roy-Chowdhury subscribe to. All the all three institute representatives praised HMRC’s efforts so far in implementing the policy.

But the consultation response might have been the last chance for the government to allay fears and push back the deadline for full implementation. This goes beyond a matter of accountancy software. The

Universal Credit is this government’s big reform of welfare and the implementation of RTI will have to work around it. Unless the Cabinet produces an abrupt about-turn, we shouldn’t be surprised to see a number of glitches.

 

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