HM Revenue & Customs (HMRC) has confirmed that its Real Time Information (RTI) system, developed to improve the operation of PAYE taxation, is to go ahead with a pilot beginning in April 2012.
The department is to invite software developers and volunteer employers to take part in the pilot. If it is successful, employers will be required to begin using RTI from April 2013, with all of them having to do so by October of that year.
Under RTI employers will report tax and national insurance deductions at the same time as they pay their employees, rather than at the end of the financial year.
HMRC said that RTI is aimed at: making it easier to ensure individuals pay the right tax after a change of job; remove the need for the P45/P46 process over time; offer the prospect of simplifying the PAYE end of year reconciliation process for employers and HMRC; remove much of the uncertainty that leads to errors in the tax credits system; and support the introduction of the universal credit from October 2013.
Work on the quality of the data going into the system will begin in October of this year and continue until all employers have moved to the new system successfully.
David Gauke, exchequer secretary to the Treasury, said: "Real Time Information will support improvements to the PAYE system, making it more accurate for taxpayers and easier for employers and HMRC to administer. We need a PAYE system that can meet the demands of the 21st century workplace and ensure that the tax system works better."
Stephen Banyard, acting director general for personal tax at HMRC, said: "We wanted people who use the system every day to give us their views on the collection of Real Time Information. We have listened to the concerns of payroll providers and employers surrounding the proposed mandation date and amended our plans to take these into account.
"We want to work with software developers and employers to help us deliver the new system. I urge anyone interested in being involved in the pilot to contact us."
This article was originally published at Guardian Government Computing.
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