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Changes to RTI Penalties for Small Businesses


RTI requires employers and pension providers to report deductions and payments they make to HMRC at the time they are made, unlike previously when returns were made after the end of the tax year.

The government previously said all businesses must introduce RTI in their payroll systems by 6 October 2014 but companies with fewer than 50 employees have been given an extra five months to comply with regulations.

Ruth Owen, HMRC Director-General for Personal Tax, said: “We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it’s best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed.

“We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.

“We believe this is the best approach for HMRC and our customers, as we all get used to the new in-year penalties.”

Businesses with over 50 employees will face penalties from October 2014 as previously planned.

Appeals against penalties can be made using HMRCs new online appeals process for automated penalties. This should streamline the appeal process for businesses and HMRC.

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