Two-fifths of companies fear financial penalties under new HMRC system for PAYE

Companies have expressed concerns about the introduction of HM Revenue & Custom's (HMRC's) new real-time information (RTI) system for PAYE and pension payments.

HMRC launched a limited pilot programme last week involving 10 employers and wants the system to be fully introduced by October 2013 – just 18 months away. However, businesses fear that HMRC is rushing the implementation and many are unconvinced about the new processes involved.

More than 40 per cent of companies fear that they could be financially penalised by HMRC for making perfectly innocent mistakes, while almost three-quarters want the launch of RTI to be delayed. Almost one-third were not convinced that the new processes are sufficiently robust.

These are the conclusions of a new survey conducted for human resources software implementer NorthgateArinso.

The aim of RTI is to enable employers and pension companies to be able to inform HMRC of PAYE changes as they are made, instead of at the end of every tax year. HMRC hopes that the new system will enable it to better keep track of PAYE and pension payment data, reducing the number of errors made by both employers and the tax authorities.

The government also hopes that with accurate and up-to-date information about earnings being fed to HMRC and transferred to the Department for Work and Pensions, the incidences of over- or underpaid tax credits will be much reduced.

RTI is also central to the introduction of universal tax credits, also slated for October 2013, as part of the government's reform of the social security system.

HMRC wants most employers to join the regime in April 2013, with the balance on-board by October 2013. It claims that RTI will save employers some £300m per year.