HMRC has made a concession to relax the strict timing of submission under Real Time Information (RTI) reporting – until 5 October 2013. Small employers will be extremely relieved...

...or they will be once they fully understand what is expected of them under RTI.

Under RTI employers are required to make:

  • a Full Payment Submission (FPS) electronic submission report to HMRC before they make any payment to employees.
  • an Employer's Payment Summary (EPS) if during a PAYE month an employer makes any statutory payments to HMRC (SMP or Sick pay for example) or suffers CIS deductions, or has not paid anyone.

Under the terms of HMRC’s compromise the intention is that such employers will be able to make submissions under RTI when they complete their main payroll run, providing that is on or before the last day of the tax month (5th). This may be after payment to employees has been made.

This will give employers some breathing space, until October, allowing employers to get to grips with the new system in spirit.

HMRC’s concession is the culmination of various efforts of the Chartered Institute of Taxation and 16 other bodies, including the ACCA, ICAEW and ICA. The relaxation will take effect until 5 October 2013.

CIOT President Patrick Stevens said: 

“The relaxation demonstrates that the Government has listened to the concerns of employers, their agents and the organisations that represent them. 

“This follows constructive dialogue between numerous professional and trade bodies, led by CIOT and LITRG, and government. It is the culmination of many discussions that we have had over a number of months with various Ministers, other MPs and Peers, and officials.”

“By October 2013 we should have a clearer idea of what concessions small business will require for RTI to work effectively for the good of all. And then we can have a sensible dialogue with ministers and officials about how to build what we have learned into the design of RTI and universal credit in future." 

Anthony Thomas, Chairman of the Low Income Tax Reform Group (LITRG) said:

“We welcome the initiative by HMRC, with the Department of Work and Pension’s support, to adapt the RTI programme to suit the needs and capabilities of small businesses."

“Everybody understands that RTI needs to work well, not just to eradicate avoidable mistakes from the PAYE system, but to help Universal Credit be responsive and sensitive to the needs of claimants. We know that small and growing businesses will bear the major part of the cost and administrative burden of RTI. Giving small businesses some leeway at least over the next few months is good news. The Government is showing its willingness to understand how best they can assist in relieving the pressures on that important sector of the economy.”

Yvette Nunn, President of the Association of Taxation Technicians (ATT) commented: 

“This announcement shows the Government are listening to the concerns of the tax profession. I urge them to keep listening and rethink their ‘cash basis for small business’ proposals too. These have the potential to simplify tax for the smallest businesses but, as currently drafted, are so badly designed that few will take them up.”

HMRC's announcement made on 19 March 2013 - as follows:

"HM Revenue & Customs (HMRC) recognise that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for small businesses.

Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).

HMRC will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension's Universal Credit.

Please see HMRC's guidance on exceptions to reporting PAYE information 'on or before' paying an employee."

Links: HMRC Reporting PAYE in Real Time, relaxtion for small businesses

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RTI: at a glance 

RTI: penalties

RTI: new engagement letters