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Further last minute changes to RTI

April 4, 2013


Two days before PAYE RTI goes live for all employers in the UK HMRC has announced a further change in its guidance for starters in relation to the filing of P45 forms. 

This comes in addition to the change announced in mid-March for the new-starter process.  The March update removed the requirement to fill out a checklist for a new employee as long as they had an in-date P45, although the employer would still have to make a new starter declaration. 

In the latest change HMRC has gone back on its most recent guidance and now requires employers to use the tax codes on the joiner’s P45, provided the tax codes shown on the P45 match specific tax codes. The intention behind the latest change is to improve the accuracy for individuals with a P45 and more than one job, according to Payroll World, who broke the story on their website.

Payroll World cautioned however that full guidance on the starter process for new employees will not be updated on HMRC’s website until 6th April. HMRC’s website remains the definitive technical guidance for the operation of PAYE.

There has been a continual accumulation of updates to HMRC’s guidance for the operation of RTI, adding the risk of confusion to the already complex operation of RTI.   

It is not clear whether these last-minute changes are the result of representations to HMRC by professional bodies, or whether HMRC is still refining key aspects of its implementation of Real Time Information reporting. Steve Wade, employment tax director at KPMG commented to ICAEW members there are a lot of guidance issues that HMRC has yet to rule on.

It is also not clear how changes to HMRC’s guidance relate to its operation of the 12 month RTI pilot. These changes appear to confirm HMRC’s pilot of RTI was not testing an identical system to the one HMRC will launch on 6th April.

HMRC’s on-going updates and evolution of its plan for RTI may create uncertainty for employers in the early weeks of RTI. Signficant changes to RTI reporting rules risk making it more difficult to achieve consistent employer submissions as well as ensuring that commercial payroll software is fully RTI-ready.

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