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HMRC extends RTI reporting relaxation for small businesses

June 12, 2013


HMRC announced today that it would extend the temporary relaxation of RTI reporting for small firms for a further 6 months until April 2014. The relaxation, or ‘easement’ as HMRC refers to it, allows small employers with less than 50 employees who pay weekly or more frequently, to report RTI monthly, where they find it difficult to report PAYE in real time.

Until this temporary relaxation was granted by HMRC just prior to the start of RTI on 6 April 2013, HMRC had insisted all employers must report PAYE in real time in strict compliance with RTI’s ‘on or before’ reporting rule. This requires employers to report RTI on or before the date they make payment to their employees.

However, HMRC’s statement stressed that from April 2014, all small business would be expected to comply with the ‘on or before’ reporting rule and that there would be no further extension of the current relaxation which it said “will come to an end at this point”. HMRC said that it had granted the further 6 month extension of the ‘easement’ “after listening to stakeholders”.

The HMRC announcement gave a further update on the numbers of employers now reporting RTI and expressed HMRC’s “delight” with the progression of real time PAYE. 1.4 million employer PAYE schemes have now begun to report RTI since it was made law in April for all but the largest 500 or so UK employers, with more than 5,000 employees. The 1.4m employers now in RTI submitted on line PAYE returns to HMRC in real time regarding 44.5 million payments made to employees between the 6 of April and 5 of May.

Ruth Owen, HMRC’s Director General for Personal Tax, said: “The roll-out continues to exceed our expectations,” with as many as 1 million micro employers now reporting RTI.  The figures released by the Revenue suggest that “83 per cent of SMEs and 77 per cent of the smallest businesses are already on board,” according to Ms Owen.

HMRC’s expression of “delight” has met with surprise in some quarters because RTI reporting is a legal requirement. Employers do not have any choice whether or not to report it.

The Exchequer Secretary to the Treasury, David Gauke MP also seemed pleased with the progress of PAYE RTI so far.  He asserted that “the transition is going well, and the vast majority of employers are now reporting their PAYE information in real time, meaning that HMRC’s records are becoming more accurate and up-to-date.  DWP is already using the new system to underpin its Universal Credit pilot, helping it to be more responsive to changes in claimants’ income levels.”

The confidence expressed by David Gauke that RTI will result in an improvement in the accuracy of HMRC’s PAYE data, may be misplaced according to recent RTI developments covered by In comments posted today on the AccountingWeb website, expressing concern for the strain RTI is putting on client relationships with their accountant, a Kent based account providing payroll services commented, “It begs the question that if the PAYE system wasn't working properly prior to RTI, how can it possibly work correctly now? [It] will be interesting to see what goes wrong at the end of the current tax year.”

Both Mr Gauke and Ms Owen emphasised HMRC continue its efforts to get all PAYE schemes into the RTI system, having announced earlier this month their intention to write to some 600,000 businesses not yet reporting RTI.

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