THE INTRODUCTION of real-time PAYE will expose errors and bad practice by businesses and could stimulate a rise in HMRC investigations, top 20 firm MHA MacIntyre Hudson has warned.
Real-time PAYE sees PAYE reported on or before the date payment is made, while changes are reported as and when they occur rather than at the end of the financial year.
At present an easement, in place for small businesses to the on-or-before requirement for real-time PAYE, expires in April 2014.
With the current relaxation, businesses are still required to report through the new system, but are able to do so once a month, rather than each time they pay their employees.
A report last month by HMRC highlighted the issues of reconciling the payments made by employers to what HMRC believe is due under RTI, leading to suggestions businesses take more time to check that they have robust systems and controls in place and are suitably represented at the time of an HMRC visit.
MHA MacIntyre Hudson tax director Alastair Kendrick said: “With RTI now in place abuses are likely to be spotted quickly. This was one of the main reasons RTI was introduced. The use of employees PAYE/NIC to help fund a business for example is a dangerous strategy which can lead to significant penalties being imposed by HMRC and in some cases criminal proceedings.
“We know HMRC are turning more attention to employer compliance. Many employers have not had a HMRC review for a considerable number of years and their systems and controls may not pass the test of scrutiny. It is also the case that in passage of time bad practices may have introduced.”