Imminent HMRC changes which effect how staff payments are recorded could cause significant problems for Worcestershire businesses, a local accountant has warned.


The new PAYE Real Time Information (RTI) rules come into effect on 6 April and will create a worrying amount of red-tape for small firms who do not have the resource to absorb the new system, according to tax expert Anita Stewart.


Under the new RTI rules, which HMRC hopes will annually save them £7.5 billion, nearly all businesses will be required to instantly send electronic details to HMRC as soon as salaries are paid to employees - rather than doing so annually.


HMRC argues RTI will provide accurate tax records and reduce benefit fraud. But Ms Stewart believes it will be seen by many small enterprises as another ‘headache’ as they focus their efforts on boosting sales in a tough economy.


Ms Stewart, partner at Bewdley accountancy firm DHJH, said: “HMRC has piloted the RTI scheme since last year but it’s clear that some firms across Worcestershire are not only blissfully unaware of the new system, but that those who are gearing for change have hit the panic button as the timescale for compliance draws closer.


“RTI will be here to stay when it is introduced in early April and will affect the majority of employers. It will be a headache for many firms but their processes and IT systems must comply with a number of key HMRC requirements.


“For example, there will be some SMEs who have modern payroll software and who hold accurate employee data. For them the transition will be smooth but for smaller firms with less resource, this could cause significant issues and financial penalties.


“HMRC research has shown that over 80 per cent of data from firms includes simple mistakes such as incorrect names, national insurance numbers and even dates of birth. So before any systems or processes can be reviewed, first and foremost Worcestershire firms must audit their data to ensure accurate employee details are recorded.


“Put simply, it will be the employers’ responsibility to ensure they have their employee information in perfect order and are capable of capturing PAYE tax information as it happens in real time.”


Ms Stewart continued: “Having met several local employers over the past few months it’s clear they are struggling to comprehend the pace of HMRC change and the numerous pages of RTI instructions.


“For these firms, who are often small owner-managed businesses with little administrative support, it’s imperative they take advice quickly which will help them begin to draw up a plan of action – which could involve drafting in professional support.


“They face a race against time and will be dealing with another layer of red tape – so with full preparation and the correct advice, they will have a fighting chance of overcoming what is a complicated system.”


HMRC are expecting 250,000 employers to join the scheme, which ties into Universal Credit changes, prior to the April start date. RTI penalties are calculated on the basis of £100 per 50 employees and accrue for each month (or part month) that a return remains outstanding after 19 May.


Firms looking for straight-forward advice on the RTI scheme can contact Ms Stewart on 01299 403503 or emailThis email address is being protected from spambots. You need JavaScript enabled to view it. This e-mail address is being protected from spambots. You need JavaScript enabled to view it .


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