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Ruth Owen HMRCs head of RTI Shrewsbury Accountants

Ruth Owen HMRC’s head of RTI

By the end of September, approximately 170,000 employers who have missed one or more deadlines for reporting PAYE information in real time (RTI) will have received a warning letter from HMRC.

Earlier this summer, HMRC reported that they’d calculated that there were 300,000 schemes that should be on the RTI scheme but had not yet surfaced. They’ve clearly been doing their homework and are now warning those who have failed to follow the RTI process to “act now” and start reporting in real time.

In reality most of these 170,000 so-called miscreants are employers have not reported because they don’t pay anyone, the PAYE scheme has closed, is no longer operating or was set up but never used.

HMRC’s director general for personal tax, Ruth Owen, said: “Over 85 per cent of employers are now reporting PAYE in real time but our records show that 170,000 employers have yet to send us a PAYE submission. Reporting PAYE in real time makes it easier for employers to pay HMRC the right amount and avoid late payments and penalties”.

She went on to state that employers need to let HMRC know by calling their Employer Helpline on 0300 200 3200. However, what she avoided answering was what’s happened to the 1,000 extra staff they were supposed to be hiring to man the phones? Anyone who has tried the number has, in my experience, had a very long wait and frustration when they do get through.

Ms Owen also advised employers who think they might employ someone in the future to either submit a nil Employer Payment Summary (EPS) each month or contact them to change the scheme to annual and then send us a nil EPS once a year.

So far 1.6 million employer PAYE schemes, covering more than 40 million individual records, are now reporting under RTI since the launch in April. The RTI information is already being used by the Department for Work and Pensions (DWP) to calculate Universal Credit amounts paid to people in its pathfinder pilot in the north west of England, ensuring the amount of benefit accurately reflects their level of income.

So far so good, but is HMRC’s admin up to the task? Anecdotally the answer is no, I have two clients for whom HMRC are refusing to accept RTI submissions.  The reason is they say the schemes were closed.  If true, it is nothing that either the client or myself asked HMRC to do, both cases involved box standard schemes with just one or two employees on them.

Having difficulty with RTI? Email David with you questions so he can help

Is Universal Credit To Blame For RTI?

Also the news that Universal Credit pilot has not gone well and looks like being another big ill-thought out mess is making me especially upset – all this RTI hassle apparently for nothing!

Despite RTI, HMRC are still managing to credit PAYE payments to the wrong period and get in a total mess over what is owed.  One client recently had a demand that was completely wrong due to misallocation of payments, which HMRC blithely suggested that they should be able to sort out themselves; give me strength!

Iain Duncan Smith

Is IDS’s flagship Universal Credits to blame for the RTI mess?

I see HMRC are also sending out survey requests to employers/agents to see how we’re managing with RTI. No doubt this will feed into the decision of whether to make the temporary arrangements for small employers permanent. Our response (truthfully completed, of course) suggests that this would be a sensible option.

The requirement for RTI has been sold to employers and accountants alike, as a necessity due to the introduction of the Universal Credit so it is understandable that many of us think it is a great hassle for very little gain. However, the real truth is that RTI a means of tighter control of PAYE was planned to be introduced anyway. The consultation document “Improving the operation of PAYE” issued on 27 July 2010 introduces RTI thus:

“HMRC has developed an option – Real Time Information – to obtain the information on deductions from employers on a real time basis. This would enable the PAYE system to cope much better with the work patterns of today which involve many more changes of jobs and rates of pay than in the past. It would also reduce the number of people needing an adjustment to their tax position at the end of the year.” (My emphasis on “has developed“).

The fact of the matter is that RTI, even if Universal Credits, (its raison d’être for being brought in) are abandoned RTI appears to be here to stay, so I guess we’ll just have to learn to live with it.

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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 Shropshire’s most respected Accountancy Practice. Email David