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Tax body calls for extension to RTI penalty-free period


HM Revenue & Customs (HMRC) is being urged to extend the penalty-free period for employers submitting inaccurate PAYE returns under the new Real Time Information (RTI) regime.


The call came from the Chartered Institute of Taxation (CIOT) and follows the launch of a Government consultation on Draft Finance Bill 2013 Clauses: Real Time Information (RTI) - Penalties: Late Filing, Late Payment and Errors.


The Government is consulting on plans to levy penalties on inaccurate submissions as soon as Finance Bill 2013 gains royal assent, which is usually in July.


However, the CIOT suggests that employers should not be fined until April 2014, adding that the penalty regime should be ‘proportionate and give time for employers to get used to the new and sometimes onerous obligations RTI imposes on them.’


The CIOT also proposes that the penalty-free period should be extended for the last tranche of employers, who are scheduled to join RTI in April 2014. It suggests that no penalties are imposed on these firms until April 2015.


Colin Ben-Nathan, chair of the CIOT’s Employment Taxes committee, said: ‘It is welcome that the new late filing and late payment penalties will not be applied until April 2014.


‘However, given this, it seems odd that the penalty for inaccuracies in RTI returns will be in place from summer 2013. Employers may take the view that it is best to delay filing if there is a risk they could be penalised for an inadvertent mistake’.


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