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PAC reveals documented concern over RTI

HMRC does not understand how small employers pay their staff, according to a document submitted to the Public Accounts Committee (PAC).

HMRC say that 90 per cent of employees are already paid via Bacs, but its definition includes employers that only use Bacs via an internet banking interface.

Bacs has been chosen as the strategic option for Real Time Information (RTI) submissions as it is considered sufficiently robust and secure to channel data to HMRC.

In a written submission to the PAC from RTI stakeholders it says:

“Our concern is that HMRC’s adoption of the interim solution and the implied delay to the opening of the Bacs strategic channel threatens both unnecessary interruption and uncertainty to small (and medium) UK businesses and the success of the Universal Credit.

“This arises because we believe it is not readily understood by HMRC how small employer payroll is actually paid or the numbers involved.

“Under the interim solution, the internet banking payment channel, which is how small businesses invariably pay their staff, is excluded. The interim solution does not require businesses paying employees via internet banking to link their net payments with their RTI return.”

Bacs penetration is far lower among small businesses in the UK and these companies employ a total of almost 15m people. It has been suggested that full Bacs penetration may be as low as 20%.

Despite HMRC’s miscalculations, lobby groups insist Bacs should be introduced as soon as possible and that any delays could jeopardise the success of the Department for Work and Pensions Universal Credit welfare reform, which relies on RTI data.

For more information please call Dave Connolly in the payroll department of McEwan Wallace Chartered Accountants on 0151 666 5940 or email enquiries@wallace.co.uk