RTI review called for

Monday 13 October 2014

The Association of Taxation Technicians (ATT) is calling for a review of HM Revenue and Customs' (HMRC) Real Time Information (RTI) scheme, following series of errors.

It was revealed that several thousand employees had received incorrect information about underpayments or overpayments when a leaked copy of a HMRC email was reported in the Daily Telegraph.

For umbrella company contractors and limited companies that are taxed under Pay As You Earn (PAYE) via RTI, this could be a point of concern and it may not be the first time they have encountered a problem with it.

There have been a number of problems with the RTI system and ATT has been bringing HMRC's attention to some of these since its inception. ATT and other interested parties have been pointing out the quirks and complexities of RTI as well as the fact it places a lot of burden on employers and agents.

President of ATT Natalie Miller commented on the most recent issue with RTI, stating: “This is an alarming revelation and further underscores the need for collaboration with external stakeholders, all of whom have a vested interest in the success of RTI.

"What we are seeing now are real and serious practical problems for possibly many thousands of employees at a time when building confidence in the system is crucial. Some of those difficulties might have been avoided if HMRC had heeded advice from ATT and similar bodies at an early stage.

“In light of this latest revelation, we are calling for an urgent review of the RTI system to ensure that it is fit for purpose."

She stressed that the importance of this lies in the fact that employers and employees need to know if PAYE is being handled well.  

What's more, the RTI system will be underpinning the universal credit system that is being rolled out by the Department for Work and Pensions to replace state benefits.

HMRC's reported comments suggested that the reason for the discrepancies in whether or not people overpaid or underpaid tax is due to the fact that employers had not sent in their final payment statements for the full 2013/2014 tax year.

Ms Miller responded by saying that perhaps this is because the process is too complicated for employers to understand. Additionally, she said that if HMRC knows that information is incomplete then it should address the issue before placing reliance on it. Failing that, she suggested that if HMRC did not know the information is missing then it is concerning that the system cannot identify this.

Matthew Fryer, Compliance manager at Brookson said "RTI was the biggest overhaul to the PAYE tax system since the 1940s, so it was to be expected that there would be some flaws with it as it was rolled out. Those who struggle to understand the system or are unsure about what they owe or whether they have overpaid should look to an accountant for advice."

By Victoria McDonnell

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