Commenting on HMRC’s consultation document and associated press release issued today on compliance and penalties with the forthcoming “Real Time Information” (RTI) regime, “Securing Compliance with Real Time Information – Late Filing and Late Payment Penalties”, Steve Wade, director and leader of the RTI project at KPMG in the UK, said:

“We agree with HMRC that penalties will be necessary to deter the minority of employers who might not play by the rules.

“But perhaps before looking at how to punish people for getting it wrong, it would make sense to iron out some of the many remaining issues around getting it right.

“It’s encouraging that the consultation document considers capping penalties but worryingly this and the proposals to stagger penalties to ease the pressure on HMRC does suggest that HMRC is anticipating that significant penalties may be levied

“As the RTI proposals currently stand, some employers will find it extraordinarily difficult to comply with the requirements through no fault of their own.  The penalty regime needs to have some flexibility to accommodate these employers who may well be genuinely trying their very hardest to fulfil their obligations but unable to because the rules are either not clear or not practical.  It would be more efficient and less burdensome to employers and HMRC if the RTI process was amended so that penalties were not issued rather than relying on automatic penalties being issued, then appealed.

“There are a number of situations where it is unclear how RTI will operate in practice such as evening staff in the hospitality industry being paid at the end of their shifts with the tax and national insurance worked out afterwards; and multinational groups with individuals being paid in different locations.  These employers currently stand little chance of complying.

“That said, it is pleasing that some difficulties have been recognised and addressed such as share incentives where there is to be extra time to submit the RTI data after the award is made.  But there is still some way to go on a number of issues.

“HMRC is inviting comments on the proposals. Under the proposals there will be late filing penalties, late payment penalties together with interest charged on PAYE paid late each month and as all employers will be affected by this, they need to ensure that they fully consider the proposals and that they make their views known.