RTI - no plan B

HMRC’s chief executive has admitted to not having a back up plan should the planned overhaul of PAYE cause the system to keel over.

Responding to MPs questions regarding the department’s effectiveness, Lin Homer was adamant that the measures in place to cope with the impending Real-time information (RTI) programme were sufficient.

Homer explained that many of the peculiar ways employers pay staff – that could cause the system to fail - have been considered in the testing stages already carried out, with the test cases being a mixture of those handpicked for their unusual systems and those whose participation was voluntary.

She said:

‘There is no contingency plan. We have de-risked by getting more employers enrolled before the October deadline in the period between April and September.’

Defending suggestions that there was a lack of awareness among small businesses concerning RTI – which is due to be launched in six months time - Homer added:

‘We do our own research and businesses have told us to not bother them until they need to start doing something, they’ve said “there’s no point in telling us too early”.’

The HMRC boss explained that as of today (1 November) reminders were being sent out to businesses across the UK, providing information as to what is required in order to have a smooth transition to RTI.

Speaking to the Commons Treasury committee, Homer praised the revenue’s work on tax avoiders, saying that the UK tax gap – the difference between what is owed and what is collected - compared favourably with other nations, but was concerned over the public’s lack of understanding of taxation rules for multinational companies.

She said:

‘One of the challenges for people to understand is that in broad terms companies are required to pay corporate tax in the country where they carry on the economic activity, not necessarily where their customers are located. That is something that it is understandable they don’t get.’