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ICAEW: RTI is an “impossible” system

November 14, 2012


Many small businesses will find Real Time Information (RTI) “impossible”, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

The accountancy body says RTI requirements, which come into effect for most employers in April 2013, are unrealistic. These concerns relate to the obligation on employers to report RTI ‘on or before’ the point they pay employees.

“While complying with the RTI requirements may be relatively straightforward for larger businesses, many smaller businesses will find it difficult and sometimes impossible to cope with,” said Frank Haskew, Head of the ICAEW Tax Faculty,

“The ‘on or before’ requirement – even with the relaxation to “within seven days” [in some instances] will not work for many businesses.

“It’s not yet clear what HRMC will do if faced with widespread non-compliance by employers – will they apply penalties or turn a blind eye? Either way, the requirement could inflict serious damage to the credibility of the UK tax system.”

ICAEW proposes that there should be a single RTI return on the 19th of the month following the month of payment – the same as the current PAYE due date.

But HMRC says it has been piloting RTI since April and found that reporting in real time is straightforward for the majority of employers and improves the operation of the PAYE system.

“We recognise that the real time reporting requirements will create genuine difficulties for some employers, which is why we have agreed an easement in which reporting can be done within seven days of an employee being paid,” an HMRC spokesman was reported as saying by Payroll World.

“We believe this will address the majority of those employers – such as pubs paying late night workers – who have practical reasons why they cannot report to HMRC in real time. We are alive to concerns, particularly from small businesses, and will continue to listen to feedback and seek to minimise administrative burdens on business.”

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