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HMRC must clarify how Real Time PAYE will affect small firms

HMRC has not established how Real Time PAYE will affect small businesses that do not have electronic payroll systems, MPs have claimed.

The group of MPs who form the Committee of Public Accounts voiced their concerns in a report on the means testing of benefits.

The draft regulations for Real Time Information (RTI) were published on 14 November 2011, and will mean that all PAYE information must be submitted monthly instead of annually. The plans also suggest abolishing P45/46 forms, replacing them with a 'leaver statement'.

Both employers and software developers have voiced concerns over the abolition of P45/46 forms. But MPs claim that HMRC has not yet clarified how Real Time monthly PAYE submissions will affect small businesses and self-employed people without electronic systems.

The Real Time system is being developed to assist with Universal Credit reforms, but, "To try to prevent a repeat of the problems that have affected tax credits, HMRC should develop an effective approach for those claimants and businesses that are likely to be outside the RTI system," the report says.