RTI implementation cost employers £292m
Employers have criticised the introduction of Real Time Information (RTI) after paying £292m in one-off and transitional costs, which were not fully forecasted at the start of the programme, with stakeholders stressing the importance of applying the learning from RTI when introducing Making Tax Digital
7 Dec 2017
HMRC has carried out a post implementation review of its RTI programme, which was introduced in 2013, outlining whether it achieved what it set out to do, how it is currently performing and how it can be improved, with stakeholders outlining what should be flagged to HMRC when introducing Making Tax Digital.
The Administrative Burdens Advisory Board (ABAB) believes that HMRC should have been more honest to employers early on and advises it to do so regarding Making Tax Digital. The Board also raises concerns around one-off costs for software saying that prices have not reduced since RTI and recurring costs to business is not adequately recognised.
ABAB said: ‘HMRC should liaise with software developers early to give them all the information they need to develop a full product, for example payrolling of benefits where not all software was ready for April creating a potential loss of income for agents and for employers who wanted to payroll in 2016/17 but were unable to.’
Although RTI has delivered savings of £64m to HMRC, savings of £672m from reduced tax credits overpayments and a net saving in administrative burden for employers of £292m per annum, there have been costs of £292m as one-off and transitional costs for employers and £307m for HMRC to implement RTI over the life of the programme.
HMRC said: ‘The investment in RTI has given value for money. However, we acknowledge the reservations expressed by some employers, agents and their representative bodies that we did not sufficiently understand the cost to small business of real time reporting.
‘Moving forward, we note that the measurement of the costs to business for future change initiatives is the subject of a separate constructive dialogue on administrative burdens and HMRC will be using the learning in their Making Tax Digital programmes.’
Employers and agents are not able to view their account in real time and they have difficulty understanding how the charge is made up. The system used to manage PAYE charges and the calculation of the monthly employer charge from submission receipts is complex and hard to interpret.
Employers do not always recognise the figures ie, they do not agree with what has been submitted. Many employers have said that there is no clear explanation about how their payments have been allocated and they are concerned about the time lag in updating the record and the lack of an agent view.
The key recommendations to improve RTI from stakeholders were:
- investigate instances where the data on our systems does not appear to agree with what the employer believes they;
- have submitted and establish why that has happened;
- enable agents and employers to view their accounts with a view of the full charge, how it is made up and in real time;
- revisit the causes and concerns for employers who need to make amendments after the year end (EYU);
- investigate alternative ways and timing of reporting of information currently required through the EPS;
- review the “disputed charges” process — make the team more joined up for example across the separate debt and employer helplines;
- consider the full end to end employer refund process and in particular automate employer refunds;
- review code numbers in real time;
- review whether the ‘on or before’ requirement is really needed; and
- improve education and communication.
The stakeholders believe that HMRC has been 'very successful' in migrating so many employers into RTI within a short timescale and also welcomed the decision to defer the implementation of in-year penalties and the removal of the requirement to answer the end of year questions on the final submission for the tax year.
HMRC’s Real Time Information programme - post implementation review is here.
Report by Amy Austin