HM Revenue and Customs is currently running a major advertising campaign for businesses to ready themselves for the arrival of RTI next month (April) in what will be the biggest shake up of PAYE in 60 years.
Although small firms feature strongly in the advertising, HMRC has now said that it recognises that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. They have therefore agreed a relaxation of reporting arrangements for small businesses.
Until October 5, 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).
HMRC says that it will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the objectives of RTI or the Department for Work and Pension's Universal Credit.
While the relaxation was generally welcomes, the lateness of the decision was seen as something of a panic reaction.
A spokesman for the Forum of Private Business (FPB) said: “Nobody likes last minute changes, and this development perhaps hints at something of a panic at HMRC that many, many small firms still aren’t fully prepared for RTI.
“However, this does seem the sensible course of action, because a tax system in meltdown come April is in nobody’s best interest, and no doubt many firms will now be breathing a sigh of relief. It will though now add another layer of confusion around a subject which is already as clear as mud to many SMEs."
As the advertisements continued to run, some specifically aimed at small businesses, there was still concern that the message was not getting across.
FPB added: “HMRC don’t have a great track record for communicating well with business, is this yet another example? The suggestion certainly is that awareness levels among SMEs in relation to RTI are nowhere near where they need to be.
“Any business still unsure of what’s expected of them must seek help immediately from HMRC. They aren’t the enemy, and they are there to help firms become compliant.”
The Association of Taxation Technicians (ATT) who representUK tax compliance specialists also welcomed the announcement of a relaxation in the RTI rules for small businesses.
Yvette Nunn, President of the ATT said: “The requirement to submit PAYE information in ‘real time’ would have placed substantial extra burdens on smaller businesses, especially those that employ payroll agents to submit their PAYE information to HMRC. This announcement won’t remove these burdens entirely, but it will go a long way towards doing so, at least for RTI’s early stages.
“Small firms and entrepreneurs are the life blood of the economy. Encouraging these businesses and minimising the admin burdens on them is vital for the UK.
“This announcement shows the Government are listening to the concerns of the tax profession. I urge them to keep listening and rethink their ‘cash basis for small business’ proposals too. These have the potential to simplify tax for the smallest businesses but, as currently drafted, are so badly designed that few will take them up.”
Further information is available on HMRC‘s website.
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Susie Hughes © Shout99 2013