Time is Running Out for HMRC's Real Time Preparation
As of April the 6th 2013 the HMRC will require employers to switch to their Real Time Information (RTI) reporting system for PAYE. However, just one month from the launch date and 81 percent of companies admit to knowing either nothing or very little of the change despite it affecting all employers. So, what is RTI and how could it affect you?
The basic idea is that every time an employer pays an employee they report it to HMRC in real time rather than waiting until the end of the year. The advantage of the system is that, if properly followed, HMRC will have accurate information of every employee and employer in the UK and, consequently, the number of forms for employers to submit in general will be significantly reduced as P35s and P14s will no longer be necessary.
The new system will, fortunately, mean no change to PAYE itself, merely an alteration to the way it is reported. However, the change is mandatory for every employer and requires advance preparation.
HMRC's new requirements will be that on or before the day an employer pays employees they must submit all the details to HMRC – every time they pay an employee. Necessary details will include the personal information for every employee, the amount each one received and the deductions made (such as Income Tax and National Insurance Contributions).
These reports mean that, from April, employers will have to ensure their payroll software is ready for RTI reports and may need to register for PAYE online if planning to submit RTI reports themselves. Employers may also need to seek out the relevant employee details in advance too, to ensure they are prepared for the first pay day report at the end of April.
However, though such preparation will be in order, and HMRC insist their campaign for business awareness of the changes is going well, a survey from Crunch accountants has found that just 19 percent of employers know anything about the change. A whopping 46 percent said they know absolutely nothing about RTI and 35 percent admit to only having a vague awareness of the change. Crunch’s Steve Crouch said,
“There’s still time to get organised, but small businesses should start planning now. Small and medium-sized businesses need to be fully RTI compliant by April 2013, so talk to your payroll provider if you’re unsure or if they haven’t yet informed you about changes.”
He particularly warned Limited Company freelancers who look after their own books and outsource some duties to others to make themselves aware of the change and prepare in time.
To make preparation easier, the team at People4business have compiled the best sources of information on RTI and how to prepare for it for you. The HMRC website naturally has the definitive guide on the subject and even provides a business checklist for before and after the event. Alternatively, there will be a week-long interactive question and answer session as of Monday the 11th of March which can be accessed by following @HMRCgovuk on Twitter and using the hashtag #RTIqa to ask questions.
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