PayeRti.org

A FREE resource from the UK accountancy profession

PAYE Real Time Information, Universal Credit & your business Read More

131Months
22Days
SINCE PAYE RTI:
Report Issues

PAYE RTI News

ABAB finds RTI costs ‘significant’

March 20, 2014

 

The Administrative Burden Advisory Board, the independent body that represents the interests of UK small business to HMRC and seeks to reduce the administrative burden of their tax obligations, has made an important contribution to the debate on RTI. In its Annual Report for 2014, the Administrative Burden Advisory Board has found that problems with RTI could have been avoided and that continuing doubt remains as to how well businesses are coping with the ‘on or before’ reporting obligation of RTI. 

The primary function of the ABAB is to work with HMRC to ensure that tax administration is efficient for small businesses. Its stated aim according to the www.gov.uk website is “to make a noticeable difference for small business by supporting HMRC to help make tax easier, quicker and simpler”.

The Chair of the ABAB, Ms Teresa Graham, said in the report that although HMRC have made progress, there is still a “challenging agenda for HMRC, demanding sustained commitment, focus and energy”.  Graham praised HMRC executives for their willingness to engage with the Board and for their commitment to addressing the issues which face small businesses.

Graham said that the move to introduce penalties in phases and to extend a reduced easement of the ‘on or before’ rule for the smallest employers were “pragmatic and sensible changes”.

However, the Board found that there were several issues with the implementation of RTI which could have been “designed out” had they and other external stakeholders been brought in and listened to at an earlier stage of RTI’s planning process.  Graham also highlighted the fact that it took considerable time to “achieve a proper debate with HMRC about the issues that ABAB members could see in the practical operation of RTI.”  The ABAB found this difficulty in promoting an exchange of ideas with HMRC “disappointing”, and also said they had encountered difficulty in attempting to shift “entrenched views”.

The Board also registered its concern that HMRC’s representation of the benefits of RTI was not reflective of the true cost burden experienced by SMEs.  Although, as reported by PayeRti.org, HMRC predicted that RTI will result in tax administration savings for businesses, these have failed to materialise and now appear unlikely in the near term. The ABAB says that they can see the possibility of long term savings, but that “the costs to businesses in the interim seem to us to be significant.”  ABAB and HMRC are working together in order to arrive at a realistic picture of the actual impact on businesses, including a “clearer quantification and analysis of the various transitional costs that businesses have undoubtedly incurred as part of RTI implementation.”

Graham recommended that HMRC conduct further research into RTI, both to ascertain the impact of the ‘on or before’ rule on businesses and to establish how many employers are actually conforming to RTI regulations rather than merely submitting the reports to appear compliant.  She said that the ABAB has “continuing concerns about how some businesses are able to deal with ‘on or before’” - also known as ‘OOB’ - and that surveys of employers in summer 2014 and 2015 would help to establish how the OOB rule works for them.

The ABAB plans to continue to examine the impact of RTI as it progresses, particularly looking for ways to make RTI compliance possible for micro businesses (i.e. those with fewer than 10 employees) without increasing the cost burden of tax administration.

< Back to news

comments powered by Disqus