HMRC steps up RTI drive

Every employer in the UK has started receiving a letter telling them what they need to do to get ready for the introduction in April of Real Time Information (RTI) payroll reporting.

HM Revenue & Customs (HMRC) started sending out the letters in mid-February, explaining RTI, which means they will need to report tax, national insurance and other deductions to HMRC every time they pay their employees, rather than only once a year.

HMRC chief executive Lin Homer said the new system would cut businesses’ administration costs by £300 million a year, once the system is up and running, and employees would be taxed more accurately. She added: “Businesses should act now to be ready for April, when RTI comes in.”

Meanwhile, the Chartered Institute of Taxation (CIOT) has called on the government to widen the penalty-free period for RTI so that no penalties are levied on employers submitting inaccurate returns until April 2014.

Currently it is proposed to levy penalties for incorrect returns from the point that the 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.

In its call to the government on 15 February, the CIOT also urged the government to extend the penalty-free period for the last tranche of employers to join RTI – such as care and support employers – who will join the system in April 2014, so no penalties are imposed on them until April 2015.

Colin Ben-Nathan, chair of the CIOT’s employment taxes committee, said: “This is a substantial new responsibility and burden being placed on employers. 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.”

Link: RTI guidance