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PAYE RTI: HMRC relaxes ‘patently absurd’ reporting deadline

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Draft regulations published on 16 November set out changes to the PAYE, NIC and CIS regulations. They also provide for phased closure of the simplified PAYE deductions scheme and a change in the tax code applied to certain commuted pension payments from registered pension schemes.

The RTI changes, explained in a technical note, include a proposed relaxation to reporting deadlines; removal of the requirement to complete part 3 of the P45 on the cessation of employment; and deferral to April 2014 of the date by which a small group of employers entitled to file RTI on paper must begin to file RTI.

Employers are required to report payments being made to employees, ‘on or before’ the date of payment. ‘Through ongoing engagement with employers, a limited number of scenarios have been identified where this deadline may create difficulties,’ HMRC said.

Paul Aplin, chairman of the ICAEW Tax Faculty technical committee, had told MPs on the Commons treasury committee that the ‘on or before’ rule would create a significant administrative burden for employers. Writing in Tax Journal, Aplin pointed out that ‘a pub landlord who calls in extra help on a busy evening – something that happens hundreds if not thousands of times practically every night of the year – will have to run the payroll and make an RTI transmission on or before the point at which he pays the individual’. The requirement was ‘patently absurd’, he said.

HMRC has proposed a relaxation to the deadline where a cash payment is made to an employee on the day work is completed; the employer could not reasonably have calculated the payment in advance; and the time or location at which payment is made means that the employer could not reasonably be expected to meet their requirements on or before the date of payment.

‘It is proposed that the deadline for reporting such payments should be the earliest of: the time of the employer’s next regular RTI return, or within seven days after the day on which payment to the employee is made,’ HMRC said.

Aplin, however, had warned that any relaxation would not take away the additional administrative burden unless it was sufficient to permit monthly filing.

Comments on the draft regulations are invited by 11 January 2013.