PAYE RTI News
RTI doubts remain for agents and employers
October 15, 2015
HMRC’s latest Employer Bulletin raises serious questions about the timeliness of PAYE earnings data reported by employers. The Bulletin opens with “There seems to be a lot of misunderstanding about what is meant by reporting PAYE information ‘on or before’ the employee is paid.” 30 months on from RTI’s mandatory introduction HMRC appears concerned by the quality of the PAYE data in their systems.
The Employer Bulletin goes on to list four employer ‘misconceptions’ about reporting RTI:
- Misconception 1 – All employers with nine or fewer employees (micro employers) can always report on a monthly basis
- Misconception 2 – RTI software won’t allow weekly submissions to HMRC
- Misconception 3 – You report your PAYE to HMRC at the same time as you pay HMRC
- Misconception 4 – Delaying reporting PAYE means you can delay paying HMRC
This follows HMRC’s publication on 16 September of research undertaken by HMRC into how small and micro businesses were coping with the requirement to file RTI data on or before pay day.
The stated aim of the research was to assess readiness amongst micro employers (those with nine or fewer employees) ahead of the scrapping of the easement on 6th April 2016 that allows them to file on or before the last pay day in the tax month, rather than on or before each pay day.
However writing on AccoutingWEB, Kate Upcraft, the payroll expert, observed that “The definition of ‘pay day’ in the introduction to the document is wrong, which is one of the underlying issues with RTI; HMRC are too imprecise in their use of terminology.”
She went on to say, “the message that comes through loud and clear is that unequivocal guidance is key. Commissioning research without a clear definition of ‘on or before’ given to the researchers shows how little the intricacies of RTI are understood by experts and these can easily trap the unwary employer and lead to penalties”.
These publications highlight the potential in RTI for a divergence between what employers understand they should report and HMRC’s actual data requirement. In the absence of any automated targeted feedback to individual employers, as anticipated by the RTI GNS system, the employer bulletin appears to be the only way in which HMRC communicates with employers on deficiencies in their RTI reporting before they fall foul of manually assessed penalties. It is not clear how many UK employers read HMRC’ employer bulletins and whether it is an effective means of communicating RTI reporting issues to employers.
John Stokdyk, editor of AccountingWEB, interviewed David Gauke, the Financial Secretary to the Treasury, the minister in charge of RTI on 10 September and asked the minister directly about “the continuing niggles over the integrity of real time PAYE information” which “so far, even have not dented his confidence”.
The Minister responded, “I think that there will always be an issue with whatever system that you have. But a more transparent tax system does lend itself to higher quality data. The problems emerge more quickly”.
However with the apparent cancellation of both the automated GNS and penalty feedback mechanisms to employers, it is not clear how employers can readily identify issues with their own PAYE accounts and RTI data. The visibility of PAYE account balances in HMRC systems for both employers and agents remains a challenge.
HMRC published this week its 'schema' of PAYE expenses and benefits and supporting docs for software developers: https://www.gov.uk/government/publications/paye-internet-submissions-expenses-and-benefits-schema.
The number of payroll related reporting obligations that continue to be migrated into RTI continues to rise. HMRC’s initiative to move the reporting of PAYE expenses and benefits in kind into RTI moves these employer reporting obligations from annual to near real time reporting. They also add further to the complexity of RTI and the challenges of resolving disputed charges.
The minister acknowledged that “Agents continue to be an important part of the operation of tax system; [with] 70% of small businesses use agents to complete their returns.”
In a further development of the tax system’s move to a ‘digital by default’ approach to taxpayers’ dealings with HMRC, HMRC announced the introduction of its Personal Tax Account service in August. “This innovative new account will help people across the country manage their tax affairs more easily. The account will eventually bring all your information and a host of exciting new services together in one place, putting you in control of your own information.”
Richard James, Programme Director for the Personal Tax Account commented “For many people … [Personal Tax Account] will eventually remove the need to complete a tax return at the end of the year”.
It is not yet clear to what extent the Personal Tax Account will use the actual values of RTI reported by individuals’ employers.
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