Small businesses 'left in the dark' over new HMRC Real Time Information payroll changes

A new study has revealed that a large number of small businesses in Britain are still not aware of changes which are set to be made to the Pay As You Earn (PAYE) system later this year.

Crunch Accounting research has found that less than 20% of employers classed as small businesses are ready for the new HM Revenue & Customs (HMRC) Real Time Information (RTI) system.

The new system will see PAYE information, such as salary, tax and National Insurance data, submitted every time an employee is paid, which is normally monthly. The old system only saw information submitted to HMRC once a year.

Almost half, or 46%, of those surveyed online in December 2012 said they were unaware of the changes, while 35% had heard of the new directive.

Steve Crouch, financial director at Crunch Accounting, queried HMRC's handling of the changes and said employers are not being kept informed with enough information about the upcoming reforms to UK legislation.

While businesses can still find out about the changes in time for their implementation, Mr Crouch warned that small and medium-sized companies need to start planning now to be fully RTI compliant by April, and before penalties are introduced in 2014.

Businesses will still be required to provide employees with P60s and complete a number of other forms for taxable benefits and expenses, but the changes to the PAYE system will mean less form filling, with the P14, P35 and P38A forms potentially being scrapped for casual employees.

A pilot scheme, which included a variety of employers of different sizes and types of businesses, was recently tested in a bid to ensure HMRC systems were working before the new way of reporting payroll information was rolled out to all employers across the UK.

The RTI scheme is being introduced to improve the operation of PAYE, and will be mandatory for all employers by October of this year.

Copyright Press Association 2013