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As I predicted in my Blog on 13th May (HMRC to relax RTI) HMRC has finally bowed to the inevitable and has extended the temporary relaxation of real time information (RTI) reporting rules for small businesses for a further six months to April 2014.

Phew written in yellow and orangeThe relaxation applies to businesses with less than 50 employees and was originally set to run until October 2013. HMRC have announced the easement after a widespread campaign across the profession and business groups, urging the government to ease the reporting burden on small firms by allowing them to submit payroll data just once a month. Typically, this can reduce the number of required reports from up to 52 per year to 12.

The Revenue announcement states “Affected businesses will now not have to change their reporting approach halfway through the tax year. We will work with businesses over the coming months to identify whether there are any specific circumstances with on or before reporting it will need to cater for in the long term”. In other words, a clear hint that they are considering making the relaxation extension permanent; we can but hope!

According to HMRC figures, around one in six payments reported under RTI since the system came in April 2013 has been made using the relaxation. In addition, 23% of the smallest employers are yet to report under RTI and are likely to benefit from the relaxation.

Accountants Everywhere Approve

Ian Young, Chair of the Chartered Accountants Direct Tax committee, welcomed the announcement and stated, “This is the result of some hard work and extended engagement between employer representatives, including professional bodies, and HMRC. I am also very pleased that although the easement is planned to end in April 2014, HMRC will continue to work with stakeholders to identify the real issues for very small employers. I am also hoping that before rules are negotiated for 2014/15, HMRC will look carefully at the compliance costs and cost savings for small businesses that they themselves have already identified.”

Chairman of the Chartered Institute of Taxation (CIOT) Colin Ben-Nathan, also welcomed the extension, and stated, “This is positive news for small businesses. On or before reporting, has been a significant concern for small employers. This announcement is good news and shows that HMRC has continued to listen to the concerns of small employers, their agents and the organisations that represent them. It will help small employers to engage positively with RTI and to keep the costs of RTI reporting to a minimum”.

I am aware, from a recent conversation with a Tax Inspector, who insisted that I couldn’t name him, that HMRC regularly monitor Accountant’s Blogs, including mine. He said, “My bosses have become acutely aware from the feedback from yours and other Blogs that the way we introduced RTI was rushed and didn’t account for the negative impact on small businesses”. He went on to say,”She (Lin Homer, Head of HMRC) is actively backtracking at the moment”.

It’s just nice to know that a little bit of pressure still works.

David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and a graduate of Liverpool Collegiate Grammar School, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David’s depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into on Shropshire’s most respected Accountancy Practice. Email David