Harsh RTI penalties

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The Chartered Institute of Taxation (CIOT) is lobbying the government to review the penalty regime for the new payroll reporting system, Real Time Information, stating that no penalties for inaccurate returns should be issued until April 2014, reports chartered accountant Harris & Co.

The new RTI PAYE reporting system will be rolled out this April and affects the majority of employers in the UK, apart from care and support employers, who have a deferred introduction date.

Currently, the government plans to levy penalties for incorrect returns from the point that Finance Bill 2013 gains Royal Assent (expected to be July 2013), although penalties for late in-year returns will not be introduced until April 2014.

The CIOT also wants to see the penalty free period for the last tranche of employers to join RTI extended so no penalties are imposed on late adopters until April 2015. Colin Ben-Nathan, chair of CIOT’s employment taxes committee, said: ‘The penalty regime must be proportionate and give time for employers to get used to the new and sometimes onerous obligations RTI imposes on them.

‘It is welcome that the new late filing and late payment penalties will not be applied until April 2014. However, given this, it seems odd that the penalty for inaccuracies in RTI returns will be in place from summer 2013. Employers may take the view that it is best to delay filing if there is a risk they could be penalised for an inadvertent mistake.’

There are also significant concerns about employer awareness of RTI and the bureaucratic burden for many smaller employers, said CIOT.

‘We think the government needs to redouble efforts to publicise what employers need to do to fulfil their obligations under RTI,’ said Ben-Nathan.

‘The requirement to submit returns “on or before” the time payment is made also represents a huge increase in the burden on many small businesses that currently keep adequate records. It will mean more frequent running of payroll software and more reporting for some employers when, in the past, they have been able to comply with their obligations by doing a monthly payroll.

‘Many small employers will find themselves paying their payroll agents much more than at present.’

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