Umbrella company contractors may be interested to learn that HMRC’s Real Time Information system is to go ahead, starting with a pilot scheme next year.
Assuming the pilot scheme runs successfully, all employers will be expected to begin using Real Time Information from April 2013 and, as from October that year, it will become mandatory. Under the scheme, employers will need to report NICs and tax when they pay their staff, rather than at the end of the financial year.
Originally, HMRC had said the system would be mandatory as from January 2013 and a software specification would be delivered in March this year. The ICAEW’s Tax Faculty said that timetable was over optimistic.
The Revenue is now calling for volunteer software developers and employers to participate in the pilot scheme beginning in April next year. Work to ensure the quality of data will start this October and continue until all employers have successfully transitioned to the new system.
HMRC’s acting director general for personal tax, Stephen Banyard, said the government department has listened to the concerns of both employers and payroll providers regarding the mandatory date and, after taking these into consideration, amended the timetable.
HMRC claims this new system will make it easier for people to pay the correct amount of tax when they change jobs and employers will enjoy a much easier end-of-year payroll reconciliation process.
However, the Revenues recent record for ‘getting it wrong’ is bound to create a degree of scepticism over the success of this project.
An annual poll, conducted by YouGov and uSwitch, found that HMRC was the ‘worst’ culprit when it came to sending out incorrect bills. That dubious honour had been held by energy companies since 2007, but the PAYE fiasco, involving nearly 6 million taxpayers, pushed the Revenue up to top spot in the bad billing league for last year.
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