Relaxation of RTI reporting arrangements

Relaxation of RTI reporting arrangements for small businesses

Small employers who pay staff on a daily or weekly basis are to be given more time to report employee earnings via the new Real Time Information (RTI) system, HMRC has announced.

The relaxation of reporting arrangements comes just weeks before RTI is due to be officially rolled out.

RTI is designed to modernise the way PAYE payments are recorded and calculated and will require almost all employers to report their employee payments on or before each pay day, as opposed to at the end of each tax year.

Employers with fewer than 50 employees who find it difficult to report every payment to employees at the time of payment will now have until 5 October to send information to HMRC by the end of their regular payroll run – provided it is no later than the end of the tax month on the fifth.

HMRC’s recognition that smaller employers may need longer to adapt to reporting PAYE information in real time follows a Parliamentary Committee report, which raised questions about whether the new system would be fit for purpose and ready for its full implementation in October 2013.

Making the announcement, HMRC said: “[We] 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 benefits of RTI or the success of the Department for Work & Pension’s Universal Credit.”

The Chartered Institute of Taxation (CIOT) and the Low Incomes Tax Reform Group (LITRG) welcomed the leniency. CIOT president Patrick Stevens said: “The relaxation demonstrates that the Government has listened to the concerns of employers, their agents and the organisations that represent them.”

He continued: “By October 2013 we should have a clearer idea of what concessions small business will require for RTI to work effectively for the good of all. And then we can have a sensible dialogue with ministers and officials about how to build what we have learned into the design of RTI and universal credit in future.”

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