TECHNOLOGY INSIGHT
How the government uses RTI
Samantha Mann MAAT MCIPPDip, CIPP senior policy and research officer, reveals how the huge volumes of data originated by payroll is being used within government
A s I write this, the accounting profession, together with their specialist colleagues in taxation, are heaving a huge sigh of relief following the government announcement that the timetable for the roll out for making tax digital (MTD) for business has been extended. The reason for the delay is to ensure “business and industry have time to adapt to the changes” – and which means businesses will not now be mandated to use the MTD for business system until April 2019 and then only to meet their VAT (value added tax) obligations. Meanwhile, back at the coal face of payroll operations, employers continue to submit their pay data ‘on or before’ the date of payment – and increasingly we hear how valuable this real time information (RTI) data is proving to be, not only to HM Revenue & Customs (HMRC) but also across other parts of government. Delivering government policy Looking back to when RTI was first introduced it was clear that it had a crucial role to play in the smooth delivery of another government policy – namely,
fair to say that probably only recently, and under the banner of MTD, has RTI experienced change to the way in which HMRC adapt their working processes to recognise a 21st century approach to tax collection under PAYE. This comes in the guise of ‘PAYE refresh’ that sees tax code adjustments made in year ‘in (near) real time’ to prevent the tax payer from accumulating a tax debt. In reality, the actual debt still won’t be crystallised until after the close of the tax year once all taxable income can be reconciled against a taxpayer’s record. Yet for a cash-strapped government it should improve the timeliness of tax collection for many employees who have more complex income tax affairs. Setting aside for one moment the issues that continue to blight the smooth operation of RTI (and anyone who has dealt with the misery and upheaval caused by duplicate records will be fully aware of the impact those issues can have), let us step back and observe some other areas of government administration and policy development that have benefitted enormously as a result of the roll out of PAYE being delivered in real time.
welfare reform in the guise of universal credit. Much pressure was placed, at that time, on employers, payroll providers and agents, together with the software developer industry, to ensure that RTI was launched on time to ensure the smooth implementation of universal credit. ...improve the timeliness of tax collection for many employees who have more complex income tax affairs Since then, universal credit has yet to be fully delivered. Thus, the so-called welfare reform continues to hobble along at a pace that we in the profession would have envied when we were being obligated to ‘deliver on time’. PAYE refresh Widely promoted as bringing pay as you earn (PAYE) into the 21st century, it is
| Professional in Payroll, Pensions and Reward | September 2017 | Issue 33 34
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