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Article contributed by ACCA

As RTI becomes a reality, employers need to be aware of the requirements and penalties.

Just before the Budget the government announced that the deadline for complying with real-time information (RTI) is to be extended from 6 April to 5 October for employers with fewer than 50 employees.

The legislation had stated that from 6 April 2013 employers were required to send PAYE information to HMRC in real time. There is no change in the calculation or payments of PAYE tax and National Insurance, but employers will have to send details to HMRC every time that they pay an employee at the time that they pay them. In summary:

  • employers will be required to send information to HMRC about pay and deductions before or at the same time as employees are paid, by way of a Full Payment Submission (FPS)
  • if no payments to employees are made within a pay period, or employers want to recover statutory payments, Construction Industry Scheme (CIS) deductions suffered or NICs holiday, they must send an Employer Payment Summary (EPS)
  • employers no longer have to file a P35 at the year end, or P14s, although P60s should still be issued to employees
  • employers will still retain P45 and P46 for new starters but will no longer have to send them to HMRC
  • benefits in kind are not part of RTI reporting and employers will still need to file forms P9D and P11D, where appropriate
  • no employers will be exempt from RTI, but the very small number who were exempt from online filing will have different RTI requirements.

There is a huge amount of guidance available about RTI here and here. You can also download ACCA’s Guide To… PAYE and RTI.

Practitioners providing payroll services to clients will need to consider updating the letter of engagement. A template for a payroll services letter is available on the ACCA website.

Penalties

In the Budget, the Chancellor has dealt with the issue of compliance with RTI and a change in the penalties regime to support it. New late-filing penalties are proposed and will apply to each PAYE scheme, with the size of the penalty based on the number of employees. Each scheme will be subject to only one late-filing penalty each month, regardless of the number of returns due in the month.

The main changes to the legislation will ensure that penalties are based on the number of late payments relating to each tax year, ring fence each penalty so that no recalculation is necessary if further defaults occur; and allow a penalty to be amended once issued, rather than having to be withdrawn and reissued. 

It should be noted that the penalty regime will only be applicable with effect from the final full payment submission due on or after 6 April 2014.