Real time information

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  • Profile picture of Adrian McCarthy
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    Adrian McCarthy

    4 years, 7 months ago

    The sustaining effect of the UK’s cash starved financial position continues to deepen its effect on UK businesses. With the UK ever being focused on businesses paying the right amount of corporation tax against their profits, there is recent evidence to suggest, however, corporation tax is an increasingly small part of businesses total tax contribution. Other taxes to include taxes on employment, feature even more significantly these days to manage business manpower, and can form in aggregate as much as twice the value of business’ corporation tax payments.
    With UK businesses feeling the strain sustaining their resources, HMRC step up to the plate in the interests of the economy and taxpayer with a new real time system of reporting. Their new online system of real time information (‘RTI’) means under PAYE, no longer will P35’s and P14’s be the mechanism in which HMRC gain knowledge of employment tax liabilities at a tax year end – information will be sent to them every time employees get paid, or an employer has a new starter or a leaver, for example. For HMRC it means they are able to more efficiently monitor the payment of employee income taxes and class 1 national insurance contributions, enabling reconciling ability of monthly taxes incurred to taxes paid, every time an employee or employees get paid whether that be on a weekly or monthly basis, for example.
    RTI will have many benefits, but the most prominent for a business is surely the reduction in administration at a tax year end – less paperwork and more automation online. However, no piece of new software or process comes without its added costs – the cost of learning and training maintenance to name a few. These are costs businesses simply have to swallow to keep up with technological advances in these current times – costs that I feel are sometimes ignored when efficiencies are announced.
    The wider implication for RTI making PAYE less burdensome is its impact on the UK’s cash flow statement. How can we complain about our services being cut or taxes being high if HMRC can’t foresee their revenue? The answer is, we can’t and RTI seeks to close HMRC’s knowledge gap – UK businesses have a moral duty to meet their payments if they are to employ staff, and if they don’t it could be said they are over-staffed!
    RTI is operational for small businesses from 6 April 2013 at first, with larger entities complying later in the 13-14 tax year.