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Quarter of small firms ‘unaware’ of major changes to PAYE


A quarter of small firms are ‘unaware’ of forthcoming changes to the way in which they must report their payroll, a leading business group has warned.


In a new survey by the Federation of Small Businesses (FSB), some 25% of respondents claimed they had not heard of the new payroll reporting system, known as Real Time Information (RTI).


Just 16% of the 1,700 firms questioned said they were ‘fully aware’ of the new process, while more than 60% of respondents have not had any communication from HMRC about the changes.


Starting from April 2013, employers and pension providers will be required to submit information to HMRC regarding deductions they have made for PAYE, national insurance contributions (NICs) and student loans when or before each payment is made, rather than at the end of the year.


HMRC believes that the introduction of RTI will make the process simpler and less burdensome for employers, while helping to ensure that more individuals pay the right amount of income and NICs throughout the tax year.


Yet with less than six months to go until businesses will have to start real time reporting, the FSB has warned that a ‘lack of communication’ could jeopardise its success.


Commenting, FSB National Chairman, John Walker, said: ‘This system is linked to the government's flagship Universal Credit scheme and we're concerned that it could flop if government does not step up its game in communicating the changes.


‘There are a number of steps that a business must complete before they can provide Real Time Information to HMRC so it is critical that those affected know about it.’


Meanwhile, HMRC said it had recently stepped up its awareness campaign. ‘We intensified our RTI communication drive a few weeks ago, as customer research shows that six months before it starts - in April 2013 - is the best time to engage with employers,’ said a spokesperson for HMRC.


‘RTI is on track and the pilot is going well. Nearly two million individual records have been successfully reported in real time by over 1,800 PAYE schemes so far’.


For further information and advice on RTI, please contact us.