We’ve been receiving plenty of queries from our clients about the introduction in April 2013 of Real Time Information (or RTI) for payroll.

This new scheme from HMRC means that all employers must submit payroll, tax and National Insurance information about all their employees “on or before” payday – in theory meaning that HMRC will always have totally up-to-date data on all company employees in the UK at all times.

As with all things to do with HMRC though, the proof will be in the pudding – the ICAEW have already criticised the hurried introduction as “impossible” for small firms, and HMRC have relaxed the reporting requirements for certain businesses that cannot meet them on time.

Last week HMRC clarified how they would be penalising businesses which did not fulfil their responsibilities. Thankfully for those not fully prepared for the introduction of RTI, HMRC appears to be taking a lenient approach:

There will be no penalties if in-year Full Payment Submissions (FPS) are sent in late, until April 2014. The current penalty process will continue to apply at the year end, with a penalty being charged if the relevant information is not up to date by 19 May. From October 2013, HMRC will send letters so that employers understand that they would have been liable to a penalty

There will be no automated late payment penalties until April 2014. The current processes will remain until then. HMRC will use real time information to collect late payments

For the tax year 2012-13, HMRC will not charge penalties for inaccuracies identified on in-year FPSs. But penalties may be charged after the end of the tax year, based on the final FPS for the year

For the tax year 2013-14, if we discover inaccuracies on FPSs, in-year penalties may apply. HMRC will use the same considerations as now to identify employers for compliance visits. If HMRC discovers inaccuracies as a result of a review, it will use the same criteria as now to decide whether a penalty applies and if so, how much it should be.

As we’ve previously detailed, Crunch clients will be completely RTI-compliant by the time the new rules come into force in April 2013. If you have any questions about how we’re dealing with RTI, leave a comment here or ping us on Twitter.

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