DSH Chartered Accountants & Business Advisors has welcomed the Government’s move to relax real-time reporting but warned small businesses that it does not offer a reprieve from the significant PAYE system shake-up.
Real Time Information (RTI) is designed to improve the operation of PAYE – Pay As You Earn – and sees employers of all sizes making an online submission known as the Full Payment Submission (FPS) before each payroll is run.
Once the FPS has been made, information can be accessed by Government bodies such as Her Majesty’s Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP). HMRC will use the data to pursue late payments of PAYE/NIC more effectively.
RTI will be used by the DWP from October 2013, when the current tax credits system will be replaced by one ‘Universal Credit’. The DWP will then be able to monitor the FPS information in order to reduce the amount of Tax Credits errors and frauds.
The system went live in April, but HMRC has recognised that some small employers who pay employees weekly, fortnightly or more frequently, but only process their payroll monthly, may need longer to adapt to reporting in real-time. To help with the transition, HMRC has temporarily relaxed reporting arrangements for small businesses to enable them to adapt their processes or change arrangements with their payroll service provider, to comply with the new legislation.
Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send their real-time information to HMRC by the date of their regular payroll run but no later than the end of the tax month in which the payments are made.
Glen Thomas, of DSH Chartered Accountants and Business Advisors, based in Maidstone, said: “We are pleased that HMRC now recognises that some small businesses may need longer to adapt to reporting PAYE information in real time. In theory RTI seems like a positive move but once again most of the burden seems to fall on small businesses, which will need to invest in new systems and understand new regulations rather than concentrate on growing the business.”
For further guidance relating to RTI, or for those thinking of taking the payroll burden away and using a bureau, visit www.dsh.co.uk or call the DSH Payroll Team on 01622 690666.