H.M.Revenue and Customs (HMRC) has announced that the introduction of Real Time Information (RTI) penalties will be delayed for small businesses for another five months to allow them to prepare for the changes.
Automatic penalties for companies with fewer than 50 employees were due to start from 6 October this year, but will now be deferred until 6 March 2015.
As part of the process HMRC will be contacting businesses in the coming months to inform them when the penalties will apply to them, based on the number of employees shown in the department’s records.
HMRC director-general for personal tax, Ruth Owen, said that RTI was already “working well” and that the most recent figures show that over 95% of PAYE schemes making payments to individuals are successfully reporting in real time.
But added: “We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.”
As part of the changes to the timetable, employers who believe they have a reasonable excuse for sending a return late will now be able to appeal to HMRC’s using a new online process for automatic penalties.
Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants, welcomed the changes and said that with the complex system still bedding in at many firms, the delay would offer them a chance to avoid automatic penalties that they might have incurred.
Despite the change in the timetable many companies still fear receiving penalties, which has been compounded by a number of errors made by HMRC since the system was introduced.
This includes the duplicating of files that has led to some firms receiving threatening letters.