Last Chance to Comply with RTI
Now that Real Time Information (RTI) has been introduced the biggest shakeup in tax since the introduction of PAYE in the 1940s is now a reallity for small businesses.
Today, Saturday the 6th of April, 2013, RTI comes into force.
The new regime dictates that businesses must work out their PAYE payments to HM Revenue & Customs whenever they pay staff.
Whether employees are paid monthly, weekly or on an "as and when" basis, firms can no longer wait until PAYE year end to file all their PAYE payments.
So, where PAYE was filed just once per annum now, if you pay your staff monthly, you will have to calculate your tax payments 12 times a year.
HMRC believes that small firms will save £300 million with the forced move to RTI but the problem still persists that many businesses are still unaware of their obligations and are still unprepared.
In a recent snap poll from the Forum of Private Businesses (FPB) 18% of firms say that they are still not ready for RTI.
Alex Jackman, head of policy for the FPB said of the latest figure:
"It’s quite clear that there are businesses out there still not ready even at this late stage. The message we would like to get out there now, even at this point, is that it’s still not too late to get on board for RTI – the ship has not sailed,"
"We know it can seem a daunting prospect to small firms, but it’s just not an option to do nothing. Better to act now than have a phone call from an unhappy tax man after 6th April, and that could happen."
HMRC has said that it will be lenient on businesses that make mistakes using the new RTI system and even made some last minute concessions just days after Budget 2013.
On the 25th March, HMRC relaxed the rules on Real Time Information, after much pressure from business groups.
Now, small businesses with fewer than 50 employees, have six months grace period within which to get their RTI into shape.
The FPB has warned, however, that firms who make no effort to comply with RTI could find themselves in trouble.
Rachel Andrews, an FPB financial specialist who has worked with Sage payroll software since 1987, has been working with HMRC over the past two years to help develop an RTI pilot scheme.
"If I had any last minute advice for businesses it would be to have everything you need ready to go. So employee addresses, date of birth, and the correct NI number. The date of birth is more important now than previously, it has to be correct.
Andrews said of the latest move:
"If I had any last minute advice for businesses it would be to have everything you need ready to go. So employee addresses, date of birth, and the correct NI number. The date of birth is more important now than previously, it has to be correct."
"And the correct NI number is also crucial. If any business is unsure to the number’s authenticity, they need to submit an NI validation check with HMRC, and they will come back to you."
Small businesses paying staff weekly would now have to send PAYE information to the taxman 52 times per year but, under last week’s concession, they can submit the information monthly until October.
Even so, firms filiing RTI will need to use the correct software to do so.
If you are unsure of your options then take a look at HMRC’s list of recognised PAYE software.