Managing Your Cash Flow
Do SMEs have the resources to cope with RTI?
3 min read
25 March 2013
In recent news, HMRC has announced the ease of RTI reporting deadlines for small businesses. Are you aware?
The mounting pressure on ministers and HMRC has finally reached a pivotal point.
Voices from all corners of industry have raised their concerns and this has, quite rightly, loudened in recent months. HMRC has had to listen and, just weeks before real time information (RTI) comes into play, has responded.
The major concern that has continually been highlighted is the massive administrative burden RTI will have on our small business sector, entrepreneurs, and start-ups.
So, the most recent news from HMRC is welcome, announcing a relaxation in the PAYE real time information rules for small businesses with 50 employees or less.
This is a step in the right direction but this, by no means, addresses all the worries that small business owners have. Recent research we conducted informed us of the huge issues that lay ahead, with one in three small and medium-sized enterprise business owners having no knowledge of the changes to the PAYE system – effectively unaware of what RTI is.
Furthermore, over 30 per cent had no knowledge whether their payroll could cope with the changes, while some 35 per cent of small businesses worried about the cost (in time and money) RTI will have on their business.
HMRC is clearly aware of these issues, having invested in a large advertising campaign this month to bring RTI to the forefront of business owners’ minds. But is the issue simply that the tax system is already too complex? And do SMEs have the resources to cope with the strain of investing time to prepare for RTI when trying to stimulate their own business growth?
A majority of SMEs believe the current tax system favours big businesses. So, as the government calls on the SME sector to help encourage economic growth within the UK, the government and HMRC have to do more to incentivise and support SMEs nationwide.
This is a logical step that will ease the pressure in the short-term. It will be interesting to see what is learnt over the summer months and what other concessions the SME community need – and whether HMRC is willing to implement these values into the long-term strategy for RTI and universal credits.
Adam Harper is the director of professional development at the Association of Accounting Technicians.