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RTI - HMRC can no longer be the bank of last resort

RTI has now been with us for over a month and employers should have submitted their April 2013 Full Payment Submission (FPS) giving details of PAYE/NI due to HMRC. Furthermore, the employers annual return form P35 for 2012/13 should have now been submitted to HMRC; if not penalties and interest on late submission and payments due are now running.

In our experience, employers in financial distress have in the past used the Crown departments as a source of working capital.  Typically, employee deductions for PAYE and NIC will not have been paid for some months or, in some instances, when payments are made, they are less than the amount due. In these situations, underpayments are identified in the annual return and in most instances the underpayment is settled as part of the annual submission.

This approach will no longer be possible under RTI. The fiscal year 2012/13 will be the last year an annual return will be necessary.  Under RTI employers must notify HMRC of the PAYE and NIC deductions as wages and salaries are paid and, unless payment is made to HMRC, HMRC will take action to collect the employers deductions.

Those employers who have relied upon Crown debt as working capital will need to evaluate their working capital requirements and for some, this may require additional capital or bank borrowing. Those employers who can not raise the additional capital or bank facilities required may need to restructure their business. Those vulnerable businesses should take positive steps to reorganise their funding to avoid HMRC's enforcement proceedings.



Date: 31st May, 2013
Author: Peter Godfrey-Evans


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