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CIOT disappointed by revised RTI reporting rule

December 12, 2013


The Chartered Institute of Taxation has said that it is disappointed by HMRC’s limited extension to the RTI reporting relaxation for micro businesses.  Colin Ben-Nathan, the CIOT’s Employment Taxes Sub-Committee Chairman, said that the limited nature of the extension to the ‘on or before’ reporting 'easement', as HMRC calls it, would mean that “small businesses with ten or more employees will lose the flexibility the current reporting relaxation affords them.  We think this is very disappointing.”

Referencing HMRC’s updated guidance for employers on tackling frequently-encountered RTI issues, Ben-Nathan said that “HMRC’s best practice scenarios […] themselves recognize that, in any event, the data reported is only ‘a snapshot of the payroll information at a point in time’.  This demonstrates that the Universal Credit calculations are intrinsically best estimates in any event”.

The body, which is the leading professional body in the UK concerned only with taxation, has recently published the findings of its own survey into the impact of the ‘on or before’ element of RTI reporting in conjunction with the Association of Taxation Technicians. The 'on or before' rule refers to the obligation placed on employers to notify PAYE to HMRC at or before the date they pay their employees. The CIOT & ATT survey was designed to complement HMRC’s own RTI ‘on-or-before’ survey, after members of both the ATT and CIOT raised the concern that the HMRC survey did not give respondents enough opportunity to comment on the issues they were experiencing with RTI.

The key recommendations put forward concerned six key areas of RTI: the ‘one or before’ rule; the liabilities and payments viewer; the employer helpline; the Employer Payment Summary (EPS); software, internet and the Government Gateway; and annual schemes.

The CIOT and ATT survey found that the ‘on or before’ (OOB) rule for PAYE RTI caused significant difficulties and extra work for employers and payroll providers, with 50% of those surveyed either reporting that they had experienced issues with on or before reporting or suggesting that a permanent relaxation of the rule was required.  Respondents varied from small domestic employers to payroll bureaux, but issues with OOB were experienced across the board.  Issues with the frequency of payments to employees and therefore the number of times the employer had to report RTI, problems with staff availability to submit reports and issues around accurate payroll data being made available in time were all highlighted as problem areas when attempting to meet the OOB requirement.

Problems with apparent errors of payment allocation and incorrect liabilities shown on the Liabilities & Payments viewer were also key concerns for respondents, as employers could be misled by the amounts shown and end up making over or underpayments of PAYE as a consequence.  Some employers also reported that they had received specified charges from the Revenue despite fulfilling all reporting duties.  Agents responding to the survey registered their frustration that they were unable to see the L&P viewer in order to help resolve client queries.  The recommendation of the ATT and CIOT was that “HMRC should continue to monitor issues with reconciling payments.  Additionally, access to the L&P viewer should be extended to agents as soon as possible.”

A number of changes to the frequency and timing of EPS reports were suggested in order to minimise the impact of the reporting burden on employers and payroll providers, especially where schemes have non-typical or very infrequent payment schedules, such as P11D only schemes, annual payment schemes or CIS only schemes.  Concerns were also raised by respondents around the extended duration and inefficacy of HMRC procedures around closing unused PAYE schemes and registering new employers, leading to issues with unnecessary paperwork and cost to employers.

Changes to payroll software to allow for more than one FPS to accommodate corrections and changes to reported amounts were also recommended in the report, along with more detail in the HMRC email receipts for submissions over the Government Gateway to improve visibility on which employer submissions had been successfully received by HMRC systems.  Problems with functionality of payroll software and quality of internet connection were also concerns for employers and agents, often frustrating timely submission of RTI reports.

Concerns raised in the CIOT and ATT report were largely left unresolved by this week’s HMRC package of help measures as they require alterations to RTI reporting regulations, particularly the relaxation of the ‘on or before rule’, which would also have an impact on DWP’s plans for Universal Credit.  Colin Ben-Nathan urged HMRC to “continue to work very closely with the professional bodies and to redouble efforts to minimise the costs of RTI and the associated administrative burdens falling on employers and their agents.”

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