HMRC is one of ten employers engaged in the department’s Real Time Information pilot launched yesterday. All employers and pension providers will be required by October 2013 to provide PAYE information during the year.
SMEs have told HMRC that RTI will ‘help them to avoid building up debt, reduce the end-of-year pressures, and get their PAYE responsibilities right’, HMRC said in a Budget day note on making tax ‘easier, quicker and simpler’ for small business. But a leading professional body has challenged HMRC’s estimate of employers’ transitional compliance costs.
‘RTI will ensure that the PAYE system meets the needs of the 21st century. It will improve the service to taxpayers by making it easier to ensure that people pay the right tax after a change of job,’ said David Gauke, the Exchequer Secretary.
‘HMRC is committed to a smooth and on-time transition. The start of the pilot today demonstrates that RTI is on track. RTI will remove administrative burdens of £300m a year from employers, mainly from the abolition of the end-of-year PAYE returns process – the biggest single contribution that any tax change could make.’
HMRC acknowledged in a Tax Information and Impact Note on 15 March that employers’ savings would be partially offset by the new requirement for employers to submit information to HMRC each time employees are paid.
‘HMRC's initial assessment of the new ongoing administrative burden is approximately £30m per year in steady state,’ it said.
In addition, one-off transitional compliance costs for employers at the point when they begin to submit RTI would be ‘spread across approximately 1.6m PAYE schemes and ... vary with the size of business’.
Those costs would arise from ‘the need to check and amend data held about existing employees, estimated as £35m (on average around £20 per PAYE scheme), training and familiarising staff with the new processes, estimated as £85m (on average around £50 per PAYE scheme), and any updates to payroll software and processes’.
The ICAEW Tax Faculty has asked employers to provide estimates of their costs. HMRC’s figures ‘do not look very realistic to us’, it said on 19 March.
Specialists
Stephen Banyard, HMRC’s Acting Director General for Personal Tax, said: ‘We have been working in close partnership with stakeholders to ensure that RTI will be introduced progressively, to give time for testing the new systems and processes and allowing them to bed in.
‘The pilot will allow us to iron out any wrinkles in a small, controlled environment so that we can ensure RTI is working smoothly as more and more employers join the pilot. We are working closely with employers and the payroll industry but having HMRC take part in the pilot will allow us to see first-hand how it is working from an employer’s perspective. A specialist team of RTI experts will be on hand to support employers through the pilot.’
Most employers will join RTI by April 2013. HMRC expects about 310 volunteer employers and pension providers to join the pilot during May and June. ‘Subject to the initial pilot being successful, up to around 1,300 volunteer employers will be reporting RTI by September 2012. By March 2013, subject to the success of the early pilot stage, around 250,000 employers will be reporting RTI,’ a spokesman said.
HMRC is one of ten employers engaged in the department’s Real Time Information pilot launched yesterday. All employers and pension providers will be required by October 2013 to provide PAYE information during the year.
SMEs have told HMRC that RTI will ‘help them to avoid building up debt, reduce the end-of-year pressures, and get their PAYE responsibilities right’, HMRC said in a Budget day note on making tax ‘easier, quicker and simpler’ for small business. But a leading professional body has challenged HMRC’s estimate of employers’ transitional compliance costs.
‘RTI will ensure that the PAYE system meets the needs of the 21st century. It will improve the service to taxpayers by making it easier to ensure that people pay the right tax after a change of job,’ said David Gauke, the Exchequer Secretary.
‘HMRC is committed to a smooth and on-time transition. The start of the pilot today demonstrates that RTI is on track. RTI will remove administrative burdens of £300m a year from employers, mainly from the abolition of the end-of-year PAYE returns process – the biggest single contribution that any tax change could make.’
HMRC acknowledged in a Tax Information and Impact Note on 15 March that employers’ savings would be partially offset by the new requirement for employers to submit information to HMRC each time employees are paid.
‘HMRC's initial assessment of the new ongoing administrative burden is approximately £30m per year in steady state,’ it said.
In addition, one-off transitional compliance costs for employers at the point when they begin to submit RTI would be ‘spread across approximately 1.6m PAYE schemes and ... vary with the size of business’.
Those costs would arise from ‘the need to check and amend data held about existing employees, estimated as £35m (on average around £20 per PAYE scheme), training and familiarising staff with the new processes, estimated as £85m (on average around £50 per PAYE scheme), and any updates to payroll software and processes’.
The ICAEW Tax Faculty has asked employers to provide estimates of their costs. HMRC’s figures ‘do not look very realistic to us’, it said on 19 March.
Specialists
Stephen Banyard, HMRC’s Acting Director General for Personal Tax, said: ‘We have been working in close partnership with stakeholders to ensure that RTI will be introduced progressively, to give time for testing the new systems and processes and allowing them to bed in.
‘The pilot will allow us to iron out any wrinkles in a small, controlled environment so that we can ensure RTI is working smoothly as more and more employers join the pilot. We are working closely with employers and the payroll industry but having HMRC take part in the pilot will allow us to see first-hand how it is working from an employer’s perspective. A specialist team of RTI experts will be on hand to support employers through the pilot.’
Most employers will join RTI by April 2013. HMRC expects about 310 volunteer employers and pension providers to join the pilot during May and June. ‘Subject to the initial pilot being successful, up to around 1,300 volunteer employers will be reporting RTI by September 2012. By March 2013, subject to the success of the early pilot stage, around 250,000 employers will be reporting RTI,’ a spokesman said.
