HMRC’s new PAYE system, called “Real Time Information” (RTI) will come into effect during 2013. Under this new system employers will have to submit online details to HMRC each payday.
In the old system we have now, as an employer you pay something to HMRC each month, but HMRC doesn’t actually know how much is due until you send in your Employer End-of-year Return (P35) at the end of the tax year. You can see why HMRC is changing it.
The online system is clearly the right way to go, but it how will HMRC introduce it? By making it mandatory next year, HMRC will create unnecessary difficulties and encounter resistance from some employers. When HMRC introduced online filing for the annual employer P35 returns, it offered a money incentive for those switching to online filing. In return there was a large voluntary move to online filing. With RTI however, it is compulsory – unhelpful for those people who are still uncomfortable with doing everything online – and there will be more automatic penalties.
HMRC has not yet finalised the penalty regime, but their consultation paper suggested £100 for each late return. This means that if you have weekly-paid staff, instead of 12 deadlines to keep to each year, that’s 52 chances to make a mistake with an automatic penalty! We suggest you change to monthly pay runs if possible.