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RTI launches “smoothly”

May 7, 2013

 

The Chartered Institute of Taxation has acknowledged the hard work of employers and payroll professionals which has “clearly helped ease the operation of RTI”. The comments by Colin Ben-Nathan, Chair of the CIOT’s Employment Taxes sub-committee highlight HMRC’s reliance on employers and their agents to implement the most far reaching change to the operation of payroll taxation attempted by any tax jurisdiction.

RTI’s introduction and the first month of employer submissions has generally run smoothly despite technical and procedural issues encountered by employers reporting RTI for the first time.

Colin Ben-Nathan went on to say: “There have inevitably been some teething problems, as evidenced by the significant amounts of additional guidance being issued now by HMRC, and it will be a continuing challenge to get all of this through to employers and agents to ensure they are complying with the new rules.”

The CIOT’s comments attributed in part HMRC’s pre-Budget announcement granting a temporary relaxation of RTI’s ‘on or before’ reporting rule for small employers as a reason the transition to RTI was easier than anticipated. This temporary concession, referred to by HMRC as an ‘easement’, allows employers with fewer than 50 staff operating weekly payroll to report RTI only monthly until October 2013, rather than weekly when they pay employees.

However, Baker Tilly, the national accountancy firm questioned whether HMRC’s easement had had any impact.  George Bull, Chair of Baker Tilly’s Professional Practices Group, commented that HMRC had issued a ‘clarification’ of this policy in advance of RTI’s launch on 6 April, which greatly reduced the numbers affected. He commented that the concession was limited [only] “to those small employers who do payroll manually and cannot file under RTI but rely on others to do so”.

The CIOT’s statement, highlighting HMRC's reliance on employers and their agents, raises the question of HMRC’s original impact assessment for RTI, which predicted savings for UK business of £300m from RTI. HMRC committed to review its original impact assessment as more information became available during the course of its RTI ‘pilot’ but it has so far failed to issue any updated business case for RTI.

George Bull commented further:

“Any huge IT project will have teething troubles, of course, but it will be interesting to see in a few months’ time whether RTI is doing what it was intended to do, according to HMRC’s sales pitch to employers and ministers.  The acid test will be in the number of RTI payroll submissions that are successfully matched to bank payments first time by the IT.  The bookies are probably not expecting a high proportion.”

The relative success of RTI’s reporting and submission capabilities in the first few weeks since its launch will mean that the next phase of RTI to be followed closely by employers and payroll providers will be what HMRC actually does with the data. The next key milestone in RTI’s implementation is likely to be how HMRC use the new data to manage employers' PAYE accounts and their compliance actions.

This next phase of RTI will start from 22 May, the date when April's PAYE from monthly payroll schemes will be due to HMRC.

 

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