Accountancy body calls for HMRC to reform RTI system

An accountancy body has said expert help is needed to deal with ongoing miscalculations caused by flaws in the real-time PAYE system.

The real-time PAYE (RTI) system used by HMRC needs to be reviewed, an accountancy body has argued.

According to the Association of Tax Technicians (ATT), problems in the system identified last year have not yet been resolved, with many incorrect liability summaries being sent to employees.

The issue has been raised in a Daily Telegraph article that focused on a leaked internal memo at HMRC revealing several thousand employees did not get the correct information about overpayments or underpayments this year.

A review that involves the expertise of external tax specialists is the best way to work out what is going wrong with the system and find a way of fixing it, the ATT believes.

Natalie Miller, the ATT president, remarked: "This is an alarming revelation and further underscores the need for collaboration with external stakeholders, all of whom have a vested interest in the success of RTI."

She added: "We are calling for an urgent review of the RTI system to ensure that it is fit for purpose. This is essential because every employer and employee is entitled to know that PAYE is being dealt with properly."

Ms Miller emphasised that this is particularly important because the RTI system "underpins" the universal credit system being introduced by the government.

She noted that if the HMRC statement that some of the problems stem from people failing to send in final statements for the 2013-14 tax year is true, that implies the process is baffling employers with over-complexity, as well as indicating HMRC may be relying too much on data that is often unreliable. Ms Miller concluded that all this serves to undermine the credibility of the RTI system.

The need for accounts to help firms sort out their PAYE tax affairs may be an increasingly substantial one, unless the problems with RTI are resolved.

According to the Daily Telegraph report, 5.5 million people have been affected by miscalculations this year, up from 5.2 million in 2012-13.