Quarter of firms are unaware of the looming changes to PAYE

A quarter of small businesses are unaware of the biggest change to PAYE for 60 years, with the introduction of 'Real Time Information' only six months away.

In the first survey of its kind, the Federation of Small Businesses (FSB) says it has uncovered a serious lack of communication between the Government and small firms.

A snap poll of 1,700 small firms found that only 16 per cent of respondents were fully aware of the Real Time Information (RTI) programme - a new way of reporting payroll – and a quarter had never heard of it, despite it being critical to the success of Universal Credit.

Simplify

RTI is a new programme designed by HMRC to gather regular information about employees. It aims to simplify reporting new starters and leavers as well as make the payroll process simpler and less burdensome. It will also support the payment of Universal Credits to those who receive them. However, two thirds of respondents to the FSB's survey are not confident that RTI will achieve these aims.

With less than six months to go until businesses have to comply with the new rules, more than 60 per cent of firms have not had any communication from HMRC about the changes.

Businesses think that learning new processes to deal with the changes as well as dealing with potential enquiries and inspections from HMRC will pose a challenge to their business.

John Walker, National Chairman, Federation of Small Businesses, said: "With only six months until RTI is due to be implemented, the FSB has real concerns that not enough businesses are aware that is just around the corner. This system is linked to the Government's flagship Universal Credit scheme and we're concerned that it could flop if Government does not step up its game in communicating the changes.

"There are a number of steps that a business must complete before they can provide Real Time Information to HMRC so it is critical that those affected know about it. Of the very small number of firms that are aware of the change, 30 per cent have had to buy new software for their business. HMRC needs to act now so that all small firms can prepare their business as they only have six months in which to do it.

"Without adequate communication and education from Government, small firms won't be able to prepare. It just isn't fair if they're then penalised for not complying."