Posted on 28 May 2014
We have just come to the end of the first year of Real Time Information (RTI) and it has not been a smooth experience for all employers.
Some of the problems experienced are not always issues created by the employer. Despite the positive publicity broadcast by HMRC regarding the success and ease of RTI, behind the scenes there are some major problems which can impact on your business:
RTI software at HMRC sometimes recreates employee records from data provided on returns if it is not posted accurately by the employer; this then creates underpayments of PAYE tax/NIC;
The employer dash board does not always work or provides inaccurate data information;
Minor errors in data provided by the employer is not always highlighted by HMRC’s initial checking systems, but will cause problems at a future point;
HMRC misallocation of employer remittances, which can cause significant underpayments and overpayments;
Employee pay dates not aligning with the tax month remittances;
The HMRC employer help line is permanently busy and accurate information is not always provided.
These issues will be amplified as the year end returns are processed, and the impact on employers could be significant as HMRC process returns and raise queries.
In the event of errors occurring, HMRC’s initial response is that the employer is at fault, with underpayments being sought and penalties also being levied. Although there were no penalties levied for RTI in the 2013/14 tax year, employers who were perceived to be non-compliant may have received a letter informing them of the penalty they would have received if the penalty regime had been operated. This indicates that HMRC are tracking non-compliance, which may affect Risk Based Assessment Ratings applied to the business, and shows HMRC’s intent to impose a strict line on penalties.
The experience of those employers taking part in the pilot of RTI has shown that it is vital that businesses:
Understand their RTI obligations;
Identify potential errors or inconsistencies before returns are submitted; and,
Have clear structures in place to verify, collate, update and track information required.
Without this, if HMRC contend an error has occurred it is very difficult and time consuming for the business to defend its position and overturn the underpayment being sought and/or automatic penalty being imposed.
Laura Parr, our RTI specialist and Assistant Director of Employment Taxes can help you assess whether your RTI reporting structures are robust, and minimise the risk of HMRC enquiry. RTI is the most significant change ever imposed on the PAYE system, and HMRC now have significantly more information about your employees and you as an employer.
There is a window of opportunity to check your procedures and understanding of RTI before HMRC introduce the strict penalty regime. If you would like further information of bespoke RTI reviews which will confirm whether your structures are robust, ensure your teams implementing RTI understand what is required, allow you to strengthen procedures before the penalty regime is imposed, and give you confidence in your reporting to minimise your risks, please contact Laura directly using the contact details below.
Laura Parr - w: email@example.com t: 01332 332 021