A study of Real Time Information has been launched by the All Party Parliamentary Group on Taxation, who is in the process of compiling a report on the new system. According to David Gauke, the exchequer secretary to the Treasury, employers will have to update payroll software to be compatible with Real Time Information.
The RTI system will operate using information of pay, tax and other deductions made, being submitted to HMRC on a frequent basis, rather than relying on information sent to HM Revenue & Customs annually. Details will be submitted before payment is made, rather than using information collated at the year end to reconcile pay and tax. As employers will be expected to update payroll systems, David Gauke was asked about implications for businesses which will have to invest in new software. He replied:
“Businesses are going to have to update software to comply with RTI, but the overall impact for employers will be to reduce costs.”
The cost of PAYE operation will be significantly reduced by the introduction of RTI, and upgrades to software will be reduced with cautious implementation. He also gave assurances that the government would look at ways to reduce the burden of change for small businesses.
According to Gauke, there are a number of benefits to the system including transparency of taxation, greater accuracy and reduced levels of fraud and mistakes. He also emphasised the requirement for accurate data to ensure the long term success of Real Time Information.
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