Business
According to Crowe Clark Whitehill, the national audit, tax and business advisory firm, Thames Valley businesses need to start planning now to meet the new PAYE scheme real time information (RTI) requirements or risk penalties.
HMRC has been looking at ways to improve the Pay As You Earn System since it loses approximately £2bn at any given time in non-payment of tax and NI contributions. And each year it handles approximately 8.6m calls on its helpline from taxpayers covering problems with incorrect tax codes, refunds or overpayments.
Under the new system employers will be required to provide HMRC with up-to-date, real-time information about deductions when each payment is made, whether it’s monthly, fortnightly or weekly, and not just at year end as at present.
Jaki Mitchell, (right), a partner at Crowe Clark Whitehill, Thames Valley said: “Many of the problems of the current system come from the quality of information provided to the HMRC and the time-lag between information being submitted and then acted upon. RTI should prevent this, but the onus will be on the employer providing the right information. The new scheme should reduce the administration processes, but if firms don’t start to work on this now, ensuring their HR and payroll systems are able to collect and handle the extra data required, then they run the risk of a huge headache and penalties in 2013.
“For most SMEs the real issue is whether they have the correct information available. Businesses should start to prepare now by checking the quality of employee information they hold. For example, do they have full names, including middle names, NI numbers, dates of birth, passport numbers and genders listed for all employees.”
HMRC intends to phase in the changes, which start from April 2013, and all businesses will be required to implement RTI from October 2013. Large employers will be migrated from January 2013 in a staged process, followed by medium employers from April 2013 and small employers brought into the system by October 2013.
HMRC has been looking at ways to improve the Pay As You Earn System since it loses approximately £2bn at any given time in non-payment of tax and NI contributions. And each year it handles approximately 8.6m calls on its helpline from taxpayers covering problems with incorrect tax codes, refunds or overpayments.
Under the new system employers will be required to provide HMRC with up-to-date, real-time information about deductions when each payment is made, whether it’s monthly, fortnightly or weekly, and not just at year end as at present.
Jaki Mitchell, (right), a partner at Crowe Clark Whitehill, Thames Valley said: “Many of the problems of the current system come from the quality of information provided to the HMRC and the time-lag between information being submitted and then acted upon. RTI should prevent this, but the onus will be on the employer providing the right information. The new scheme should reduce the administration processes, but if firms don’t start to work on this now, ensuring their HR and payroll systems are able to collect and handle the extra data required, then they run the risk of a huge headache and penalties in 2013.
“For most SMEs the real issue is whether they have the correct information available. Businesses should start to prepare now by checking the quality of employee information they hold. For example, do they have full names, including middle names, NI numbers, dates of birth, passport numbers and genders listed for all employees.”
HMRC intends to phase in the changes, which start from April 2013, and all businesses will be required to implement RTI from October 2013. Large employers will be migrated from January 2013 in a staged process, followed by medium employers from April 2013 and small employers brought into the system by October 2013.
More From: Business News Next Story: New guide to help get your business noticed Previous Story: What do interviewers really think?