Accountancy firm KPMG has revealed its concerns over the Government's plans to amend the way in which employers report PAYE information to Her Majesty's Revenue and Customs.

At present employers are free to carry on their businesses safe in the knowledge that they do not have to report on PAYE matters until after the end of the tax year. The change will mean that employers will instead have to submit this information in real time.

The change was announced in a bulletin issued last week entitled "Employer Bulletin". According to KPMG this bulletin received from the HMRC is likely to be the first that most employers will have heard about the amendment. It is worrying because of the potentially huge impact this change will have to the everyday running of businesses. No doubt the change will be of bigger impact to smaller businesses without dedicated teams to report to the HMRC. It is being described as the most radical shakeup of the PAYE system In Sixty years.

Employment tax director at KPMG, Steve Wade, said: "Moving to real-time information (RTI) reporting, in which employers send payroll information to HMRC on or before every payday instead of after the end of the tax year is an enormous change." he continued by pointing out that "Many small and medium-sized businesses are likely to be blissfully unaware of this radical change. If they have up-to-date payroll software, hold current and accurate employee data and their software provider is gearing up for the move to real-time reporting then they may find the transition is smooth. But if not, they are likely to face significant problems complying and may incur penalties."

The change comes at a time when the Department for Work and Pensions is looking to revitalise the benefits system into something more streamlined and effective. 'Universal

Credit' aims to: improve work incentives; smooth the transitions into and out of work; support a dynamic labour market; simplify the system, making it easier for people to understand, as well as easier and cheaper for staff to administer; reduce in-work poverty and cut back on fraud and error. The plan is to improve the new system in October next year. It is important that PAYE information is received in real time rather than after the tax year in order to support this transition.

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