Real Time Information system

7 December , 2012 | 0 Comments | Filed under: Features

If you presently employ staff or you own a small limited company where you take a salary, we think you would want to know about the new Real Time Information system thought up by HMRC that is to come into effect in April 2013.

As you almost certainly already know, currently, all employers must pay over to HMRC, on a monthly basis, all of the Income Tax deducted from employees pay and all employer’s and the employees’ National Insurance amounts. An employer must also file a report (P35 etc) at the end of the tax year, in May. This report details all of the Income Tax deductions and all NI amounts paid over to HMRC during the April to April tax year. If this May (P35 etc) report is filed late, after the dead-line date, HMRC will automatically issue a monthly “late filing” penalty of £100.00 that will accumulate on a monthly basis until the report is received by HMRC.

The good news is, the new Real Time Information System does away with the May “year end return”!

The bad news is, instead, from the start of the tax year in April 2013, HMRC will require you to file electronically up to date P35 type information on a monthly basis! This is because with the current system, HMRC has no idea who has paid what tax and NI until the “end of year return” has been submitted in May, just after the end of the tax year.

More bad news is, as with the current “late filing” penalty mentioned above, HMRC will take a very strict view on the new monthly reporting deadlines and they will also be very strict about the accuracy of the reported monthly figures which should agree with the actual monthly payments to HMRC of Tax/NI. If there is late reporting or there are errors in reporting, penalties will be incurred.

Some good news is that the national accounting bodies are currently appealing for a delay in the introduction of the penalties until the start of the April 2014 tax year so that, particularly, small employers, have time to “get up to speed” with the new system!

These new monthly returns are to be filed electronically using commercial payroll software or, if you have less than 9 employees, by using HMRC’s own PAYE tools. You will also be required to submit starter and leaver information using this new system. This will assist HMRC in providing correct PAYE codes.

We hope this helps you with your new PAYE arrangements for the new Real Time Information System, but if you need help or advice, please contact us on 01629 813832 or visit our Website www.chaplinsaccountancy.co.uk for information about our services.

Chaplins is a small accounting practice based in Bakewell, covering the Bakewell, Buxton, Tideswell, Matlock and the Hope valley areas.

© Lynne Chaplin

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