RTI – how’s it going so far?
The new Real Time Information (RTI) process of submitting PAYE information has been ‘live’ for a few months now. HMRC appear pleased with progress so far, reporting that over 1.58m PAYE schemes are now successfully set up and submitting in real time. They acknowledge that there have been teething problems with the online systems and there have also been a number of customer issues, but overall they’re confident that these can be resolved in the near future. Their stated aim in the first year of RTI operation is to support employers in using the online software and helping them with any queries.
What support are HMRC offering to employers?
In addition to their general customer service one of the ways they’re providing support is a ‘Troubleshooting’ section on their website. This gives detailed advice on what to do if any of the most common customer problems occur ie:
- No data appears in forms filled out with the tools
- There are service issues or online availability issues
- Error messages appear when trying to submit PAYE data
Further information on these can be found in HMRC’s Operating PAYE in real time (RTI) section.
How have RTI users found things so far?
Despite the help offered by HMRC it’s clear that many users are experiencing severe problems. So far around 167,000 employers are being contacted by HMRC due to missing RTI deadlines, which potentially means late payment penalties. HMRC have also admitted that although 85% of employers are now set up for RTI a significant number have not yet made a submission. In fact, this has proved to be such an issue that for businesses with less than 50 staff HMRC has granted a temporary respite. These businesses will now be allowed to submit once a month rather than every time they pay someone until April 2014. This is 6 months more time than the original deadline of October 2013. This is a good sign; the move was implemented as a result of feedback from stakeholders, which means they’re actually listening to what’s happening on the ground.
Employers who have started making submissions have experienced several problems, one of which is the issue of duplicate records. This has long been an issue within the PAYE system and HMRC are working to correct these errors, but employers are finding that they must dispute sums owed and work with HMRC to get them corrected which is more work for them. Other common reasons for disputed charges are:
- Employers not sending in a return in a tax month and/or not telling HMRC that they haven’t paid anyone.
- Employers deducting statutory payments from the amounts due and not telling HMRC.
It was always expected that there would be initial problems with implementing RTI so these and the many other issues which have arisen come as no surprise. The real test will be in how these are overcome and how quickly as they are having a real cost and time impact on those businesses which are most affected.
How much is RTI compliance costing employers?
As a consequence of the difficulties many are experiencing, a real concern for many small and medium sized businesses is the increased costs they’re facing to ensure that they can meet the increased administrative demands of RTI compliance. One key issue here is that the free RTI software offered by HMRC has proved difficult to navigate for many employers. In many cases the expertise does not exist within the personnel of these firms to deal with this, so specialist help is being bought from outside to do the job. HMRC anticipated that RTI compliance would cost small firms around £120 million. However, according to research done by the Forum of Private Business the figure is actually closer to £311 million which is real cause for concern.
Overall, while HMRC are optimistic about RTI the end-user employers, particularly smaller employers, are far from comfortable. While it’s encouraging that HMRC do appear to be taking on board feedback from stakeholders it will still be the employers themselves who will have to struggle through while all the issues are being sorted out.
At Intouch our Limited Company contractor clients can work with their personal accountant to make RTI an easy and painless process. For many the contractor is their company’s only employee, so it’s simply a matter of ensuring that your accountant knows how much PAYE income to process and they’ll do the rest.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.