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HMRC: PAYE RTI benefits will take time to be felt

June 26, 2013

HMRC has admitted that it will take some time for the full benefits of the new PAYE system to be felt by employers.  In a speech given at the Tax Journal Breakfast Club on 18 June which focused on HMRC’s priorities for the rest of 2013, Chief Executive Lin Homer has conceded that it will take longer than they expected for employers to see the gains in efficiency and time which HMRC forecast as a result of the introduction of RTI.

Homer acknowledged the launch of RTI has “gone much, much better than many people thought it would – and as well as we realistically expected at HMRC.”  She stated that there were now more than 1.4 million businesses reporting PAYE information in real time, including SMEs and a million micro businesses (those with ten or fewer employees).

Homer acknowledged that there was “initial work for businesses to do” in order to begin reporting RTI, but stated that the new system will help “get tax right in year and also cut fraud and error in the benefits system.”

The relaxation of reporting for businesses with fewer than 50 employees which has been extended to April 2014 was also mentioned by Homer, and was presented as a measure designed to help business through a “year of transition”.

The admission that the ‘benefit’ to UK employers of RTI’s introduction has yet to be realised, represents a significant reversal of HMRC’s original view of the costs to UK business of RTI. HMRC’s original impact assessment said UK business would save £300m annually. Despite HMRC assurances to update this original impact assessment as its 12 month RTI pilot launched in April 2012 progressed, it failed to do so. It is not clear if the original RTI impact assessment will now be revised.

The speech also covered a number of other HMRC key objectives for 2013, including the reduction of tax avoidance and evasion and the continual improvement of its online services.

This included mention of HMRC’s commitment to give agents access to a client tax dashboard, under its Agent Strategy, as part of the planned expansion of its online services but Lin Homer confirmed this will take place over the next 3 years.

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