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The Real Time Information system is due to start the testing phase in April 2012 which, if successful will lead to a phased roll out in 2013. October 2012 will see a second test. The largest concern among Members of Parliament and professional bodies, is accuracy of data held by HM Revenue & Customs.

RTI will update the existing PAYE system, allowing tax details to be updated each time an employee is paid. The information would be passed to HMRC through the Banks Automated Clearing System, each pay day. This would ensure accurate, up to date information rather than employers submitting pay and tax details each year end. However, according to the Treasury Select Committee report, the quality of data is still an area of weakness for HMRC, with the success of RTI being dependent upon data quality.

The report has revealed concerns from professional bodies, who have requested thorough testing and slow implementation. Whether the system can be delivered within the budget of £100 million is also being questioned. According to David Gauke, HMRC minister the problems with Pay As You Earn occur as a result of the quality of information which is received by HMRC and the time lapse before the information is acted upon.

The acting director general of HMRC, Stephen Banyard is confident that the project will be delivered in a timely manner, but is dependent on the improvement of data quality. To ensure the success of RTI, all parties which includes HMRC, employers and tax advisers will all need to improve data quality.

About The Author

Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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