ACCA says that the full impact of RTI will be felt by businesses in October when the new Universal Credit system is rolled out.
Chas Roy-Chowdhury, ACCA head of taxation, says: 'UK businesses will wonder what has happened to the Red Tape Challenge when RTI and, subsequently, the new Universal Credit systems kick in. While there will be teething problems when RTI begins on April 6, the full brunt of how burdensome this whole system is for businesses will be felt when the Universal Credit regime comes into force.
'Under the new Universal Credit system, the employer has a strict requirement to report any change in circumstance relating to the pay of an employee in real time, which sounds simple enough. However, while the monthly PAYE return has a 19th of the month filing deadline, RTI reports, called 'on or before' reporting, are in addition to this and allow for changes to an employee’s pay which occur outside of the normal PAYE filing. This is the real burden and can create a multitude of additional 'on or before' filings.
'While HMRC has said it will take a soft approach with businesses to errors and delays in the early stages of RTI, even allowing for the recently announced monthly reporting for some employers until October this year, the true penalty will be felt within the businesses themselves who become bogged down in the endless stream of real time reporting when they should be focused on aspiring for growth.
'The Department of Work and Pensions needs to accept that UC regulations should be changed to reduce the disproportionate burden upon businesses. It should be optional for all businesses, not just SMEs, to choose whether they need to file the 'on or before' information more frequently than the monthly payment schedule for UC claimants. The marginal benefits of the strict ‘on or before’ obligation are by no means clear relative to the obvious extra burden on the whole of the UK employer community, not just those with UC claimants on their payroll.
'Even if the business community and the payroll and accountancy professions that support UK enterprise meet these challenges with success, we question whether DWP will be able to cope with RTI.'
In March, ACCA and other professional and business groups secured a deferral RTI implementation for businesses with 50 or fewer employees until 6 October 2013, but ACCA warns that the problem of ‘on or before’ filing will not vanish and will remain even after 6 October.