Tax information obligations will present problems for small employers

Friday, 27 April 2012 10:06 AM

The Low Incomes Tax Reform Group (LITRG) has said that HM Revenue and Customs’ (HMRC’s) assessment of the impact of the introduction of Real Time Information (RTI) on small employers is inadequate. LITRG is concerned that employers who lack internet access or who are not computer savvy will find it very difficult to fulfil their obligations under RTI.

Under RTI, information about tax and other deductions under the Pay-As-You-Earn (PAYE) system is required to be transmitted to HMRC by the employer every time an employee is paid. HMRC began phased introduction of RTI this month, with a group of around 300 employers who have volunteered to take part in an initial pilot. This group will be extended later in the year and all employers will be required to submit information using RTI from October 2013.

LITRG Technical Director Robin Williamson said:

“HMRC have produced an Impact Note which looks at some of the difficulties that certain small and very small employers will face when RTI and its associated obligations enter into force. But it goes nowhere near far enough in recognising the needs of those small employers who remain digitally excluded – i.e. who are unable, or find it excessively difficult, to use computers or access the internet.

“We welcome the fact that HMRC recognise the likely impact of RTI on ‘care and support’ employers (mostly older and disabled persons who engage a carer or personal assistant) and those who because of their location do not have reliable, or any, access to broadband.

“But those are not the only groups who are digitally excluded. The Impact Note says nothing about the broader categories of digitally excluded employers, such as older people, those with disabilities and those who cannot afford the cost of computer equipment, broadband subscriptions and the requisite training.

“All those groups will experience additional burdens owing to the increased filing requirements under RTI, and HMRC must state what reasonable adjustments it will make before the Impact Note can be regarded as anything like compliant with the Equality Act 2010.

“We are also concerned about the extra burdens that RTI will impose on small employers when they start having to transmit information to HMRC either before, or at the same time as, they pay their employees. This requirement is bound to impose extra burdens on the smallest employers who because of the nature of their businesses may have to make payments to their employees at more frequent intervals, sometimes at weekends.”

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