It didn’t take long for HMRC to start crowing about their “success” in defeating UK Uncut Legal Action over its deal with Goldman Sachs. On the day of the decision they tweeted this:
"The High Court’s dismissal of UK Uncut’s claim puts to rest the fallacy that HMRC is soft on large businesses" http://t.co/El8WRzHxIp This week’s Private Eye states that
Homer [HMRC Chief Executive] insisted to MPs that the judge “found that on all the substantial points our judgement was right”. which he didn’t. If the whole inglorious episode was indeed an endorsement, things are even worse than we thought
I accept that most members of the public will dismiss the whole thing as yet more proof that the Establishment always wins. It’s interesting, however, to compare HMRC’s treatment of Goldman Sachs with their treatment of one of my one man band limited company clients.
In Goldman Sach’s case HMRC let the bank of £20m in interest.
My client paid her company’s £14,600 corporation tax bill a couple of months late and was charged interest of £99. Within a few weeks of being asked to pay the £99 HMRC transferred the collection to iQor Recovery Services Ltd, a private firm of debt collectors.
Nice that HMRC have their priorities correct and, in their own words, isn’t
soft on large businesses
If you’re struggling to begin to use RTI, don’t worry you’re not alone. I have had a number of people ask for help because they seem to be going round and round in circles with HMRC! 
The main problem, I believe, is that HMRC simply provide too much information about RTI. Click on the HMRC website and you’ll find pages and pages of advice written by people who already understand RTI and have forgotten that the vast majority of business owners didn’t start up in business to save HMRC time and money.
So, in an attempt to simplify the process I have listed what you need to do to put yourself in a position to start to operate RTI:
- Make sure you have a PAYE scheme. HMRC describe this as “registering your business with HMRC” to use PAYE for Employers.
- If you already have a scheme find your PAYE Reference and Accounts Office Reference. They are shown on the front of your Payslip Booklet. New users will receive the details from HMRC in the post.
- Register your business with the Government Gateway. It’s possible that you’ve already registered, so don’t register again. Find your details!
- Register for Online PAYE.
- If you think you’ve already registered for Online PAYE enter your details as an existing user and see if PAYE is listed as a service you can use. If it is and it doesn’t have “Activate Service” next to it you’re ready to start to use RTI.
- If “Activate service” is entered after PAYE you haven’t registered for Online PAYE.
- Click on activate service and enter your PAYE Reference and Accounts Office Reference.
- HMRC will send you an activation code through the post within about ten days.
- When you receive it, log on to the HMRC site and enter the code. You’re then ready to start to use RTI.
Real Time Information 2013-14
A week tomorrow (Saturday, April 6th) is the start of a new tax year, 2013-14, which means new tax allowances and new NICs (National Insurance contributions) along with Real Time Information (RTI) and a thousand and one other amendments to the tax system. Does anyone really believe the Government is committed to simplifying the tax system? Yesterday’s publication of the Finance Bill (629 pages with a further 552 pages of explanatory notes) is a pretty good indicator of how tax is being simplified!
Fortunately most people, including business owners, can safely ignore the vast majority of the 2013/14 changes, unless you’re an accountant that is! And assuming, if you are in business, that you do have a good accountant who will make sure you don’t fall foul of any of the new rules.
One set of changes, however, which most businesses cannot ignore are the new rules relating to PAYE and NICs. Finding the details isn’t easy but if you want all the information in one place I would recommend HMRC’s PAYE and NICs rates and limits for 2013-14.
Admittedly, it doesn’t include NIC rates for the self employed nor does it tell you the optimum salary to pay yourself if you’re a director of your own company but it’s worth keeping a copy for future reference.
2013-14 is going to be a challenging year for small businesses who operate PAYE. Making sure you have the basic information correct for your employees will make it easier.
And finally, if it all does prove too much, just contact us and we’ll help you solve your problems.
After considerable pressure, HMRC have relented (slightly) over the RTI reporting rules for small businesses.
Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).
N.B this isn’t a deferral in the date RTI starts, it’s (in HMRC’s words)
to enable small businesses to adapt their processes or change their arrangements with their payroll service supplier so that they can comply with the new legislation.
It’s very easy to overlook one of the key requirements of operating RTI – the need to register for Online PAYE with HMRC.
RTI returns will be submitted electronically to HMRC which means that you have to submit an application to register for Online PAYE.
Applying and being issued with a PAYE scheme isn’t the same as registering for PAYE Online.
To register you’ll need your
- Government Gateway account details (If you don’t have a Government Gateway account one will be created for you as part of the registration process)
- Your PAYE reference
- Your Accounts Office reference
Registration is fairly easy but the system will not operate until you have received and entered your activation code from HMRC, which will be sent to you in the post. There is some evidence that codes are taking longer to arrive than normal (about seven working days). So, the sooner you do it the better.
- RTI requires all employers to start providing employee PAYE, National Insurance (NI) and Student Loan information to HMRC on or before every payday rather than at the year end as currently.
- Construction Industry Scheme (CIS) details do not have to be reported under RTI.
- Businesses must sign up to PAYE online now if they are responsible for their own payroll reporting.
- Employers must ensure the data they hold (e.g. NI numbers, addresses, date of birth) is correct.
- Each time an employee is paid, an employer must submit details of gross pay, deductions, statutory payments,etc
- Details must be submitted for all employees who are paid, including those who are paid below the tax and NI thresholds and therefore do not have any deductions.
- The most difficult aspect of RTI may be collecting the correct NI number!
- Employers must record changes to employee work patterns. If an employee takes unpaid leave, the employer must notify HMRC , or HMRC will assume they have left their employment!
- Businesses will no longer have to report starters and leavers separately as this information will be supplied in real time as part of the payment report (Full Payment Submission – FPS).
- Employers must continue to provide P45 forms to leavers.
- There will be no need to complete forms P35 and P14 at the end of the year.
- Employers must, however, continue to provide each employee with a form P60 by 31 May.
- Before going live with RTI, employers must follow a process of “data alignment” by submitting an Employer Alignment Submission (EAS).
- Once the EAS has been submitted, you will receive an ‘invitation’ from HMRC to join the RTI scheme.
With effect from 6 April 2013 all employers will send their wages information electronically to HMRC each time they pay their employees rather than sending the information at the end of the year (on a P35).
Employers will need to check their payroll software is RTI compliant or make arrangements to use an external provider such as their accountant.
Pay details etc. must be reported to HMRC on or before the payment date.
All information (there are up to 118 individual items – see below) must be accurate and up to date.
Information is required for all employees – full-time, part-time, temporary or casual.
Full name, date of birth, National Insurance number, gender and address will be required.
The software must collect details of all employees’ pay,tax and deductions and the hours worked during each pay period.
Construction Industry Scheme (CIS) details are not reported under RTI.
HM Revenue and Customs (HMRC) is reminding people with an income over £60,000 whose family is still receiving Child Benefit to opt out before 28 March 2013 if they wish to avoid filling in a tax return and repaying the benefit for the 2013/14 tax year.
The offer only applies to people who would not have to complete a tax return otherwise, so it’s not an easy way to drop out of Self Assessment!
People who continued to receive Child Benefit after January need to register for Self Assessment by 5 October 2013 to repay the benefit received between January and April 2013, but opting out now means they will not need to fill in a tax return in future years.
N.B The High Income Child Benefit Charge was introduced on 7 January 2013 and affects families where someone has an income over £50,000. These families have two options: either to stop receiving Child Benefit payments, or to pay back some or all of the payments they receive through the tax system.
A few weeks ago HMRC published their first list of businesses who they say are deliberately defaulting paying tax. Richard Murphy has suggested that only little people are named and shamed for not paying tax but I would like to raise another point
What is the point of HMRC naming and shaming businesses when they have failed to collect the tax and penalties and will probably never ever receive a penny of the amount due?
The Trade Beverage Company Ltd of Mobberley owed £156,000 in corporation tax and £292,000 in penalties but according to the Manchester Evening News the company
was set up in March 2009, but 13 months later defaulted on a tax payment. It did the same in February 2011 and again in the following September. Last March it was served with a winding up notice and is now listed as being in liquidation.
HMRC would be better spending their time collecting the tax rather than naming and shaming people who are probably not bothered about the publicity. However, as I have explained previously, it’s not HMRC’s fault.
Yet another copy of VAT Notes has been released by HMRC.
I have said previously that it isn’t the most exciting read you’ll come across but HMRC do expect you to read it (even though they don’t send you a copy any more!)
The full notes are here.
