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HMRC overwhelmed by requests for annual PAYE schemes

April 29, 2013

HMRC has been forced to suspend temporarily requests to change PAYE schemes to report annually. The surprise development comes as employers and their agents attempt to find a way to ease the burden of RTI reporting, resulting in significant numbers requesting HMRC convert their PAYE schemes to annual schemes. However, HMRC has put all further conversion on hold as it struggles to cope with the extra administrative burden.

Rebecca Benneyworth, Deputy Chair of the ICAEW Tax Faculty, explained that for one-man companies or director-only companies, changing to an annual scheme could be very useful.  Under an annual scheme the director or their agent need only submit an RTI Full Payment Submission or FPS for the one month in which the director is paid, saving the time and effort of submitting nil EPS returns every month.

This option has proved to be so popular that HMRC has been unable to cope with all the requests. Benneyworth says “I get the impression they’re having a problem with the IT."

"I know that they realise how important the annual scheme process is and are intending to get that sorted as quickly as they can."

"In the meantime they advise submitting nil EPS for April and May 2013.”

HMRC state in their RTI guidance notes published on their website that to qualify for an annual schemes all employees must be paid annually, they must all be paid at the same time, and the employer must only be required to pay HMRC annually.  If an employer does not meet all these requirements they may be refused a transfer to an annual scheme.

The fact that the number of requests for annual reporting schemes has overwhelmed HMRC’s systems suggests that HMRC appear significantly to have underestimated the number of owner-director businesses requiring this function. By the same token, this development indicates the desire of very large numbers of micro businesses to avoid the burden of monthly RTI reporting where it is possible to do so.

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