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RTI – A Fine Tax Mess From HMRC!

From October 2013, HMRC plan to collate payroll information from every employer in the UK every month, rather than just every May as at present. This project has much political muscle behind it as it is a key plank for the Universal Credit system championed by the Government.

Here is my forecast for this project: A MESS!!!

HMRC call this project Real Time Information – RTI for short.  I predict that by December 2013, RTI will more accurately stand for Really Terrible Information-handling.

At present employers, many via tax agents like me, submit this information in April and May.  At this time of the year the HMRC database goes into complete meltdown and the length of time spent waiting on tax helplines shoots up to over 20 minutes.  They make many mistakes, allocating payments made by one employer to a different one, and then hounding the first one aggressively for non-payment.

They can’t run this properly once a year but they think they can do it smoothly once a month!

It comes as no surprise that an independent Civil Service review classified this as a high risk project.  My concern is that it will be rammed through at 100 miles per hour and small employers will end up paying the price in the form of even more chaotic HMRC administration.

For successful implementation, you’d want to have an organisation of highly motivated staff running a world-class tax system with a successful track record of implementing major software changes and enlisting the support of key third parties such as banks and accountants.

Instead of this, HMRC is an organisation populated by utterly demotivated staff running a shambolic tax system close to meltdown.  It has a dismal track record of messing up even relatively simple software changes and has alienated key third parties by its chaotic and unprofessional service levels.

For now, if you are running a small business with payroll submissions, make sure you are NOT using the HMRC system, but a commercial program such as Moneysoft which is HMRC accredited.  The HMRC software is poor quality, and worse still if their database makes an error such as deleting your submission – it happens! – then you may have no record of having made it and hence attract a fine.

This will be another fine mess.  I’d sooner entrust my payroll system to Stan Laurel and Oliver Hardy than HMRC!

Wednesday 2 May 2012