By Daniel Hunter
Almost one in three businesses are not ready for the biggest change to payroll since PAYE was introduced in 1944, according to a poll by accountancy and business advisory firm Moore and Smalley.
The online survey revealed that 30 per cent of businesses that took part in the survey were unprepared for Real Time Information (RTI) reporting that came into force on April 6.
RTI is a radical change in the way employers report pay, tax and national insurance contributions (NICs) to HM Revenue and Customs (HMRC). Until now this has been an annual task carried out around May, at the end of the tax year.
However, from this month, most employers must report these details every pay day — or face stiff penalties expected to start at £100.
Margaret Merrifield, payroll services manager at Moore and Smalley, believes the results of the poll reflect a disturbing level of complacency about complying with HMRC rules among some of the region’s businesses.
“RTI reporting is here to stay and requires substantial management resources to implement and maintain. There is no escape clause or hiding place for employers who fail to comply," she said.
“Late-filing penalties for RTI will apply to each PAYE scheme, with the size of the penalty based on the number of employees in the scheme. This means different-sized penalties will apply to micro, small, medium and large employers.”
HMRC is prepared to be lenient during the introduction of RTI, but Margaret warns that businesses should not take this for granted.
“Businesses will be allowed one unpenalised default each year, but will be charged a penalty for all subsequent defaults. Penalties will be charged quarterly, and subject to the usual reasonable excuse and appeal provisions," she explained.
Employers must also ensure the data they submit is accurate, otherwise employees could end up not receiving the correct amount of Universal Credit, or attracting unwelcome attention from HMRC regarding personal data issues, tax deductions and benefit issues.
“RTI will enable HMRC to see how much PAYE it is owed at any given time, which may result in employers being pursued at a much earlier stage than under the old regime," Margaret added.
“Traditionally, businesses with financial issues have delayed PAYE payments to help their cash flow, but this will be more difficult when HMRC has direct visibility of the debt. As a result, some businesses may be pushed into insolvency.”
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