The Chartered Institute of Taxation (CIOT) is calling for a permanent exemption for small employers for PAYE Real Time Information (RTI) reporting.

The CIOT makes the call in its submission to a review of the competitiveness of tax administration in the UK being conducted by the Office of Tax Simplification (OTS).

As part of a drive to generate ideas for a more competitive UK tax system, the OTS’ review asked businesses, taxpayers and their advisers to submit their thoughts on how administration of taxes can be improved to produce an environment in which UK businesses and taxpayers can thrive.

CIOT Employment Taxes Sub-Committee Chairman, Colin Ben-Nathan, commented: “Last year the CIOT polled its members to gather views on the effect Pay-As-You-Earn Real Time Information (RTI) is having on employers and the challenges they face in having to report immediately to HMRC on pay paid to their employees. Over half of the respondents replied that small employers should be allowed to opt out of RTI reporting, saying their clients found it too prescriptive, time consuming, and even unworkable.

The CIOT suggest that Government allows small businesses to report employees’ pay monthly to HMRC, rather than on or before each payment is made, so as to reduce the administrative burden. It has also queried how HMRC and the Department of Work and Pensions (DWP) use RTI data. The Institute asks whether it is really the case in the pilots on Universal Credit (UC) that the data is being used instantaneously by HMRC/DWP to impact on the UC payment being made, i.e. would less burdensome monthly reporting not do pretty much the same job? On the other hand, if the Government is capable of using RTI data immediately, why are HMRC’s systems apparently not yet able to use RTI data to adjust employees’ and pensioners’ tax codes in real time to ensure that they are paying the right amount of tax in-year?

The CIOT expresses support in its submission for the OTS’ recommendations on simplifying employee benefits and expenses, and also backs the current OTS review of the taxation of termination payments and living accommodation.

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