News and Commentary

HMRC's new PAYE Real Time Information system (RTI)

RTI becomes compulsory for all employers from April 2013

Every time a weekly or monthly payroll is run, full details of pay and tax deducted for each employee are sent electronically to HMRC. This should make a huge difference in terms of keeping tax codes correct and up-to-date and it will be essential for the implementation of the government's Universal Credit benefits scheme. It should also go a very long way towards eliminating under- or over-payments of tax accumulating over the course of a tax year.

Where we operate PAYE on behalf of clients we will have the relevant details so generally this will be an invisible part of the pay run, which may take fractionally longer each time; but under this system there is no end-of-year P35 procedure. Overall, payroll costs should not rise and may even fall.

Computerisation means that this change, although significant in principle, will require very little time or effort to implement. Unless there are exceptional circumstances, we do not expect to be making any one-off or additional charges relating to the transition.

However if payroll records are not complete, or if you do not follow all the proper procedures when recruiting or losing staff, RTI will create a lot of inescapable problems. If this applies to you, it really is in your best interests to get 'sorted' as soon as possible.

The system essentially standardises PAYE procedures and will eliminate anomalies such as the P38S exception for working students and the concept of casual labour, which will disappear.

Please get in touch if you think you need to do anything about your payroll and PAYE records.

Email scams - emails apparently from HMRC

Not so much news; more of a reminder...

There are some quite convincing emails going around that appear to be from HMRC offering tax refunds. There are plenty of clues in the emails to indicate they are fraudulent but there is only one simple rule to remember: HMRC NEVER SEND EMAILS TO INDIVIDUALS.

So if you get such an email, don't click on anything except the delete button and definitely do NOT reply with any bank or other personal details.

Self Assessment - penalty regime for late submission and late payments

The self assessment penalty regime was made considerably harsher from 2010/2011 onwards:

£100 for late submission after 31st January regardless of the tax due (including nil tax or a repayment due) and/or whether or not it has already been paid. This is a significant change, as the penalty had previously been reduced where the tax due is under £100 or cancelled if no tax is due.

£10 per day if submitted after 30th April until finally submitted up to a maximum of £900 (which would take it to the end of July).

The greater of £300 or 5% of the tax due if submitted after 31st July.

Further, the greater of £300 or 5% of the tax due if submitted after the following 31st January

They also ominously talk about up to 100% of the tax due if a year late 'in particularly serious cases'.

The above all relate to the filing of the Return itself - nothing to do with the tax payable.

The late payment penalties for the tax payments are as before; 5% of the outstanding tax as at 28th February, 31st July and 31st of the following January.

Interest accrues on day one of all late payments regardless of any of the above.