Accountants have spoken out against HM Revenue and Customs’ (HMRC) Real Time Information (RTI) system, claiming there are a number of technical problems.
RTI, which was introduced last year, – is supposed to enable employers to send payment information to HMRC in-real time, allowing the quick and accurate calculation of tax owed by an employee.
However, the introduction has not run smoothly. In February, HMRC were forced to delay the issuing of planned penalties to employers not yet using RTI because adequate time had not been allowed for businesses to fully understand the new system.
Prior to this, it was reported that tens of thousands of workers were mistakenly classed as unemployed under RTI and the system was accused of lacking comprehensive disaster recovery.
Now, there are claims that not only does the programme not reflect PAYE (Pay As You Earn) information in real time, but HMRC also predicts that more people are overpaying or underpaying tax under the new system than they were with the old.
ICAEW attempts to tackle the issue
The Institute of Chartered Accountants in England and Wales (ICAEW) has recognised the issue and is compiling details of problems found.
“The main problems have been over disputed payments where the employer has submitted an RTI return showing the PAYE due and HMRC has then pursued a different amount of tax,” claimed ICAEW Tax Faculty Committee Chair Paul Aplin.
“This has been exacerbated by the fact that the PAYE ‘dashboard’ employers can view is not updated in ‘real time’ as you would expect from a system called RTI, but only a couple of times a month.
“As a result of discussions with representative bodies including ICAEW the dashboard information has been significantly improved, though it is still not real time,” he added.
Despite this, HMRC denies that this is the case, claiming that earnings information is updated in real time and it is also planning to improve the accuracy of tax codes during this year.