The latest developments over HMRC’s ‘real time information’ PAYE have drawn criticisms from a leading tax body. The Chartered Institute of Taxation have expressed their concern over plans to impose late filing penalties when the system comes fully into place in October 2013.
The RTI system will mean that employers will file PAYE and tax details for employers online when they are paid, and has been undergoing a trial period over the last few months. HMRC initially started the trial with around 300 employers, and this is expected to grow right up until it becomes compulsory next year.
The chair of the CIOT’s employment taxes committee, Colin Ben-Nathan, said that because the RTI system is a new responsibility and burden being placed on employers, “the penalty regime must be proportionate and give time for employers to get used to the new and sometimes onerous obligations RTI imposes on them.” He added that the CIOT recommend no late filing penalties for the first full year of RTI reporting.
Mr Ben-Nathan also described the ‘on or before’ style or reporting, which will cause difficulties for employers who could face continuous payroll issues in order to comply. He said that “unless this is resolved, penalties and non-compliance may become a way of life for some employers” adding that the RTI should not create a situation where there are widespread issues due to the design of the system as opposed to being bad practice from employers.
At the most recent IR35 Forum meeting HMRC confirmed that they will be providing a full update of the trial at their meeting in October. They also asked forum members to help gather wider information from those in the trial in order to establish any issues, which suggests that the system is still a while away from being ready.
A HMRC spokesman added the following comments; “HMRC welcomes comments on our proposals for how late filing and late payment penalties will apply best to RTI. Our use of penalties has never been about raising revenue. They are designed to encourage compliance, and to reassure the majority who do file and pay on time that HMRC takes non-compliance seriously.”
“We understand the concerns that some employers have raised about reporting payroll information “on or before” the time of payment. We are working with employers and other representatives, including our Customer User Group, to find the best way to address these issues.”
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