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HMRC Budget Cut by 5% 

HMRC's budget is to be cut by 5% in 2015/16 as departments across Whitehall are forced to tighten their belts under the government's latest cost-cutting plans. 

Chancellor George Osborne announced the savings in Parliament today as part of the Treasury's Spending Review for 2015/16.

Among other notable measures is that the requirement for the Department for Work and Pensions to cut 9.5% of its current budget, the Department for Business Innovation & Skills to cut 6% of its budget and the removal of automatic pay rises for public sector staff. 

Osborne said the proposals, which total £11.5 billion in cuts, would move the British ecomomy from "rescue to recovery".

Posted by Gary Wilson Thursday, June 27, 2013 10:22:00 AM Categories: News

Extension to RTI easement gives breathing space to small employers 

Small employers are set to benefit from the extension of an RTI reporting easement that will now run until spring next year.

Companies with fewer than 50 staff are still required to report PAYE through the RTI system, but will be able to do so just once a month until April 2014, rather than each time they pay their staff. This relaxation of the rules was originally set to expire in October.

HMRC’s director general for personal tax, Ruth Owen, said: “The roll-out continues to exceed our expectations. We will now write to the minority of employers who are not on board, to establish how we can help them meet the requirements of reporting in real time.”

And Treasury secretary, David Gauke said: “The Department for Work and Pensions is already using the new system to underpin its Universal Credit pilot, helping it to be more responsive to changes in claimants’ income levels. This is all good news, but we will continue to listen to and work with businesses to ensure that all employers are reporting in real time by April 2014.”

John Allan, national chairman, Federation of Small Businesses, said: “Reporting payroll in real time is a big change for small firms, so it is good to see that many have stepped up to the challenge and are doing it. There is no doubt that it adds another administrative burden for business owners and in some cases additional costs as firms outsource their payroll.

“For those who want to manage it in-house it is good news that the temporary relaxation, which allows small firms to report once a month has been extended. We would like this to be made permanent so that after

April next year, when a business can be fined for reporting late, the smallest firms are not put under undue pressure.”

More than 1.4m employer PAYE schemes are now reporting to HMRC in real time since its launch in April, meaning that 83% of SMEs and more than 1m (77%) micro-employers have already begun filing.

Information for approximately 44.5m payments made to employees for the month until May has been passed to the Revenue.

HMRC says it will identify whether there are any unusual circumstances it needs to cater for in the longer term, but employers of all sizes need to plan to be reporting RTI from April 2014.

Posted by Gary Wilson Thursday, June 20, 2013 11:40:00 AM Categories: News

HMRC defeats £9m EBT tax avoidance scheme 

A tax avoidance scheme, which routed profits of a tax advisory business through Employee Benefit Trusts (EBT), has been closed by the courts.

HMRC challenged tax deductions of almost £9m by John Dryburgh from his companies, Scotts Atlantic Management and Scotts Film Management, which he paid into EBTs.

The scheme involved the extraction of profits from companies while at the same time securing corporation tax deductions. Employers paid money into an EBT which gave undervalued shares in a new company, creating a loss to the employer.

The payments came out of profits earned by selling tax avoidance film schemes, but the First-tier Tax Tribunal (FTT) ruling has now protected £2.4m of tax. FTT judge Howard Nowlan said: “There is no doubt that Mr Dryburgh not only lied to the Tribunal in a material way, but he appeared also to have fabricated evidence, forged documents and thrown away a memory stick in order to destroy evidence.”

Although Dryburgh is in bankruptcy and Scotts Atlantic Management is in liquidation, HMRC believes that the cash can be recovered.

Treasury secretary, David Gauke, said: “This scheme – like so many others – was not worth buying into. HMRC will always challenge this type of planning and the tribunal decision should send a clear message to anyone thinking they can get away with tax dodging – HMRC will pursue you and you will have to pay the tax due as well as interest, on top of the promoter’s fees.”

Posted by Gary Wilson Wednesday, June 12, 2013 12:37:00 PM Categories: News

Company car advisory fuel rates updated 

HMRC has updated its advisory fuel rates for all journeys taking place on or after June 1 2013.

The updated rates are available from the HMRC website

For one month from the date of change, employers may use either the previous or new current rates, as they choose.

Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

Posted by Gary Wilson Wednesday, June 05, 2013 12:59:00 PM Categories: News

RTI: HMRC set to contact thousands of non-compliant PAYE schemes 

Up to 600,000 PAYE schemes have not switched to Real Time Information (RTI) yet and a large number of employers are set to be contacted by HMRC imminently as a result.

The exact number of non-compliant schemes will be confirmed by the Revenue before the end of the month.

While some of the businesses that have not started filing in real time yet are not required to do so before October, many are understood to be small businesses that were required to switch over from the beginning of this tax year.

An HMRC spokesman told Payroll World: “At the end of June, we will be writing to the small minority of employers whom we expected to start, but haven’t yet done so. We will confirm the final numbers before the end of June.”

The content of the communication is as yet unclear.

So far HMRC says 1.3m PAYE schemes have switched to RTI successfully though 1.9m are considered as RTI-appropriate.

It could be a fact that there are people that will ignore the requirement to register until they get a letter saying they will be fined, but there are also some that just find it difficult to comply.

These employers will all be very small businesses that can be difficult for HMRC to make contact with or who don’t use commercial payroll software.

HMRC also says pilot employers that did not submit a return by May 19 will be subject to a PAYE end of year penalty. This treats pilot employers the same as those who were not part of the pilot.

Posted by Gary Wilson Wednesday, June 05, 2013 12:57:00 PM Categories: News

NICs waiver and state pension reform announced 

Employer National Insurance contributions (NICs) up to £2,000 will be waived for all companies under new laws announced in the Queen’s Speech that also outlined the introduction of a flat-rate state pension.

The National Insurance Contributions Bill, first announced by Chancellor George Osborne in the Budget earlier in the year, is aimed at making it easier for small companies to take on new staff.

It will result in a third of employers – or around 450,000 firms – no longer paying NICs from April next year.

The Employment Allowance is permanent and open to all businesses and charities in the UK.

It will also be simple to administer, to ensure maximum take up. From April 2014, it will be delivered through standard payroll software and HMRC’s Real-Time Information system.

Employers will only need to confirm their eligibility through their regular payroll processes. This confirmation will ensure that up to £2,000 will be deducted from their employer NICs liability over the course of the year’s PAYE payments.

The Government will engage with business representative bodies on the details the new allowance, to ensure the system is as simple and effective as possible.

A new Pensions Bill that was also announced will introduce a flat-rate state pension worth about £155 a week from April 2016. This will replace the current two-tier system, which is made up of the basic state pension and second state pension.

The state pension age will also rise to 67 between 2026 and 2028, eight years earlier than planned.

The Queen’s speech is written by the government and delivered by the monarch. It outlines the legislation the government wants to pass through Parliament over the coming year.

Posted by Gary Wilson Wednesday, May 22, 2013 9:39:00 AM Categories: News

HMRC's own software fails to file RTI 

HMRC’s Basic PAYE Tools software, used by some small employers to run their payrolls, is failing to file Real Time Information (RTI) submissions.

A pre-recorded message on HMRC’s helpline states: “We’re aware of an issue for some employers trying to submit their RTI returns using HMRC’s Basic PAYE tools. We are investigating this issue and will provide an update early next week.

“Employers should pay their employees as normal even if they have problems with their payroll and can’t submit their PAYE until after they have paid their employees. We apologise for any inconvenience this may cause.”

It should work out the tax and National Insurance contributions for employees in each pay period and report the payroll information to the Revenue.

However, in some cases, it is currently displaying an error message when submitting RTI.


Since posting the above report on 08/05/2013 we have received the following from an HMRC Press Officer:

"The roll out of RTI is progressing well. Since 6 April over one million PAYE schemes have successfully started to report PAYE in real time. This includes over 140,000 BPT users successfully submitting returns.

 As with any major change, a few initial problems have been identified and these are being resolved quickly. The issue referred here is not a BPT fault, but we have published guidance to help those employers affected to resolve it. The vast majority of BPT users who have already started to report PAYE in real time are successfully submitting returns without any issue."


The guidance can be found at:

Posted by Gary Wilson Wednesday, May 08, 2013 2:32:00 PM Categories: News

“Pot follows member” pension system to be introduced 

Small pension pots will follow workers as they move between jobs in a government bid to reduce the proportion of people reaching retirement with five or more dormant investments.

The change is in response to what would have been a likely increase in dormant pension pots with the introduction of auto-enrolment (AE). The policy aims to reduce the number of people with fragmented small investments to one in thirty. When people move job these pots could be stranded or lost completely over time.

The ‘pot follows member’ system will mean that over someone’s working life any pots accrued of less than £10,000 will automatically move with them.

Instead of having lots of small pension pots all over the place, the aim is for people to have a ‘big fat pot’ which will buy them a better pension.

When people change job, they often leave behind a pension pot which becomes forgotten and which can even attract higher charges once they leave the firm. The government want to make it the norm that when people move job their pension rights can move with them  if they wish.

This will reduce the costs of providing pensions and will help people to be much more engaged with their pension savings.

Posted by Gary Wilson Wednesday, May 01, 2013 9:25:00 AM Categories: News

HMRC: RTI launched as planned despite strikes and IT maintenance 

HMRC says that more than 70,000PAYE returns have been submitted using Real Time Information (RTI) since April 6 and that union strike action and routine IT maintenance work has had no effect on the launch.

An HMRC spokesman said that the initial stage of the RTI roll out was progressing well despite strike action launched to disrupt it taking place this week

“The RTI release formed part of HMRC’s routine annual IT release and maintenance, and as usual we have gradually restored our online services as planned,” he said.

“The controlled go-live for RTI will continue for the next two weeks. During this period we will carefully manage information through the system whilst we complete our post go-live system checks, to ensure that the system is returning expected responses. During the controlled go-live, other responses may take longer than will be expected during business as usual.

“The industrial action will have no effect on the introduction of RTI, which was launched as planned on 6th April.”

Employers must report PAYE in real time from their first pay day on or after April 6 each time they pay their employees, rather than yearly.

Ruth Owen, HMRC’s director general personal tax, said: “RTI is the biggest change to PAYE in 70 years and it is great news that so many employers have started to report PAYE in real time.

“But we are under no illusions – we know that it will take time before every employer in the country is using RTI. We appreciate that some employers might be daunted by the change"

Posted by Gary Wilson Wednesday, April 10, 2013 12:50:00 PM Categories: News

Relaxation of RTI reporting arrangements for small businesses 

Small employers who pay staff on a daily or weekly basis are to be given more time to report employee earnings via the new Real Time Information (RTI) system, HMRC has announced.

The relaxation of reporting arrangements comes just weeks before RTI is due to be officially rolled out.

RTI is designed to modernise the way PAYE payments are recorded and calculated and will require almost all employers to report their employee payments on or before each pay day, as opposed to at the end of each tax year.

Read the full report

Posted by Gary Wilson Friday, March 22, 2013 1:35:00 PM Categories: Business Tax
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