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HMRC to chase non-compliant PAYE schemes

June 5, 2013


PAYE schemes which are not yet complying with RTI regulations will be contacted by HMRC by the end of June, a news report has revealed today. The story, broken by Payroll World, stated that as many as 600,000 PAYE schemes have not begun to report information in real time to the Revenue, despite the legal obligation to do so.

This development is significant because it represents the first compliance steps by HMRC under new RTI reporting obligations which began in April.

Only the very largest UK employers, with more than 5,000 employees are free to choose their own RTI start date until October 2013. The PAYE schemes not currently reporting RTI affected by this move are likely to be small businesses.

A significant proportion of the approximately 1.6m PAYE schemes in operation are made up of what accountants refer to as ‘one man band’ sole proprietors who take an income from their business which is liable to PAYE.

Small businesses like this may have tried to register their PAYE scheme as an annual scheme, but have been prevented from doing so by an HMRC systems breakdown. HMRC did not disclose if the 600,000 businesses it plans to contact about their failure to report RTI includes those businesses prevented from reporting RTI by the failure of HMRC’s own free RTI reporting application. HMRC’s Basic PAYE Tools or BPT application is thought to be relied on by over 140,000 businesses with 9 or fewer staff.

However, the numbers of non-compliant PAYE schemes indicated by the Payroll World report is itself significant. HMRC’s most recent public announcement indicates some 1.3m employers have ‘started to report’ RTI out of a total of some 1.6m PAYE schemes currently in operation. Previous figures from HMRC at the end of April suggested 1m employers were reporting RTI.

It appears likely that HMRC’s original figure of 1m PAYE schemes actively reporting PAYE in real time is the correct figure. 1m PAYE schemes operating PAYE with a further 600,000 that are not, does fit the overall total of about 1.6m PAYE schemes in operation. If correct it would suggest the higher figure of 1.3m cited by an HMRC spokesman in recent days, may indicate businesses registered with the Government Gateway to report PAYE in real time but which have not yet done so.

The Payroll World story says that HMRC will confirm the number of businesses who have yet to report RTI, and are required to do so, later in June. 

No details were given by HMRC about the content of its letter communication to non-compliant employers. There are no penalties for the late submission of RTI returns until April 2014, but it is not clear if HMRC has reserved any compliance action for businesses not taking any steps to comply with the obligation to report RTI.

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