By George Bull, Senior Tax Partner at Baker Tilly

The announcement today (Tuesday) that smaller employers (with fewer than 50 employees) will have another six months to adjust fully to the new Real-Time Information reporting system for payroll information is genuinely welcome, taking some of the bureaucratic pressure off already struggling small to medium sized enterprises (SMEs).

But will they ever be able fully to meet the requirements of a system designed by civil servants for civil service benefit?

It is great news that HMRC and the DWP are relaxing the filing deadline for RTI so that smaller employers only need to file monthly when they carry out their normal monthly payroll processing.

But why has it taken so long for this outbreak of pragmatism? Ministers want SMEs to be the drivers of recovery, but insist on introducing an IT-based policy that for many is simply extra bureaucracy, and for some is impossible to implement properly.

RTI is intended to support the DWP’s introduction of Universal Credit in October, and HMRC’s policing of tax payments by employers, but it won’t raise a penny more in tax or NIC, and changes are still being forced on HMRC at a very late stage.

We have already seen much-needed concessions on payments to workers at the end of their shift, and NI on reimbursed expenses, and payments to examiners, and payments to election workers, and now SMEs. If the introduction of RTI had not been so rushed, all these wrinkles could have been anticipated and designed into the system carefully. And there are still questions to answer before 6 April.

It remains to be seen how and when further changes will be made, to cope with the remaining difficulties, but since RTI goes live for all but the largest employers in 18 days, those changes will have to be made to the live system. Given that the Carter Report on HMRC’s e-services said ten years ago that no system should become mandatory until it had been tested “live” and found to work for a year, questions surely have to be asked about the rushed introduction and the lateness of changes. Large employers will generally cope, but the needs of small business have only been recognised belatedly, and there must be more relaxations on the way.

Finally, for those who collect examples of gobbledegook, this extract from the latest HMRC email on RTI is pure gold: “Additionally, in the regulations published on 15th March, you will see a further relaxation on the reporting of earnings for casuals. The previously announced easement required PAYE information to be reported by the earliest of seven days or the next scheduled payday. We have now removed the reference to ‘next scheduled pay day’, as a result of this amendment, so PAYE information now has to be reported within the next seven days, as a result of responses to the consultation on our regulations. When payments are made non-electronically (for example cash or cheque) to employees for work done on the day of payment, employers will have to report the PAYE information within the next seven days.”

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