RTI PAYE Could Hit SMEs With Late Filing Fines

The ‘real time information’ PAYE scheme currently being trialled by HMRC, and expected to be in place by October next year, will see businesses file PAYE and tax details for employers online when they are paid. However, in a move which will bring further criticism to the revenue, it has been revealed that SMEs could face fines of up to £2,000 for failing to file on time.

At a time when many SMEs are struggling, as well as there being high profile problems with HMRC and recent issues with the RBS and Natwest banks, Phil McCabe of the Forum of Private Business described the proposed fines as “beggars belief”, adding that these fines are more of a “backward step” than part of a system aimed at growth.

HMRC, who have often been in the spotlight for poor performance and other problems such as the recent staffing strikes, have also this week reported through the National Audit Office that approximately £5.2 billion in taxes were written off last year.

Whilst the report from the NAO found this to be less than the £5.5 billion written off in 2010/11, it still made up more than 1% of the total tax collected: £474.2 billion. Whilst overall revenues grew by around the same amount (£4.5 billion), reducing the losses remains a HMRC target.

This did not stop Margaret Hodge, chair of the committee of public accounts, from criticising “the sheer scale of waste and mismanagement at HMRC “. She said that there was no surprise that the NAO found these “substantial problems” with HMRC’s accounts and that this year “a litany of tax errors and scandals come to light”.

Amyas Morse, head of the NAO, agreed that there are many lessons for HMRC to learn, adding that “before implementing significant structural changes, the department needs to be clear about what its future operating model will be. It needs to understand how its business will change following the introduction of real-time information and universal credit.”

ICS are one of the leading contractor accountants and administration companies and have helped thousands of contractors working in a range of industry sectors. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.