Ministers were pressed on the CIOT’s concerns over the enhanced Business Record Checks regime and the introduction of PAYE Real Time Information (RTI), at last week’s Conservative Conference in Manchester.
Business Record Checks
At a meeting organised by the thinktank Reform and R3, the insolvency trade body, George Crozier, the Institute’s External Relations Manager, told David Gauke, Exchequer Secretary to the Treasury, that the Institute was supportive of a lot of the Government’s reforms, such as improvements to the consultative process and the setting up of the Office of Tax Simplification, but was unhappy about HMRC’s programme of business record checks, which had recently been extended. While improving record keeping by business is necessary and important, said Crozier, the CIOT had two particular concerns about the programme. First they were concerned that it is a blunt instrument more about heavy-handed revenue-raising through fines, when it should be a collaborative process about educating business about good practice and supporting them in improving their systems. Secondly it was important that what counts as adequate records needs to have regard to the sort and size of business. Expecting the smallest businesses – which might only have one or two employees – to have perfect records kept up to date every day was unrealistic and not in keeping with the Government’s aim of reducing business burdens. He asked the minister to keep this area under review and to be willing to make changes.
Responding, Gauke said he was conscious of concerns about the programme. This is always something he would keep an eye on, he said, explaining that what HMRC was trying to do was to “get the balance right”. In the interests of fairness it was important that there is a level playing-field. The SME sector was important but a minority did not pay taxes as they should and this needed to be dealt with. However Mike Cherry, Policy Chairman of the Federation of Small Businesses, who was a member of the panel at the meeting, did not feel the minister’s attempts to sooth were sufficient. “We have a real problem here,” he explained: ‘adequate’ is a subjective word and there is nothing laid down by HMRC to give you the basics. He made a particular plea for HMRC to make the online VAT process easier. Gauke acknowledged that was a fair point.
Real Time Information
During a meeting at Manchester’s Palace Hotel, Iain Duncan Smith MP, Secretary of State for Work and Pensions, was questioned about a range of issues, particularly benefit reform and the introduction of Universal Credit.
The CIOT’s George Crozier said the Institute and its Low Incomes Tax Reform Group were supportive of the integration of benefits and wanted Universal Credit to work but were very concerned at the tight timetable for its introduction, especially in relation to the introduction of Real Time Information, where the pace was being forced by the introduction of Universal Credit. They were particularly nervous because of the record of past governments on big IT projects, and because of the sheer complexity of the project – in particular the significant differences between what counts as income for tax or tax credit purposes and what counts as income for benefit purposes. Crozier encouraged the Secretary of State to ask probing questions of HMRC about the timetable for the project and, on behalf of the two bodies, urged him to ensure that there will be sufficient time for full testing of Real Time Information for employers of all sizes – including the smallest employers – with enough time after that to allow changes to be made to ensure information transmitted by RTI is useable for Universal Credit purposes.
Responding, Duncan Smith argued that this was not "a major, major change". What we [DWP] need from HMRC is, he said, not all of RTI but a feed in to the information we want. He said that RTI would be happening anyway, regardless of the introduction of Universal Credit. “We will keep checking we are on track,” he said. “We are on track at the moment.” He accepted the timetable was tight but argued the DWP have a good record on computer change. Also, he said, the process would be ‘Agile’. That is, it is being done section by section, completing a section then moving on. After the first group had been migrated across there would be scope from the process. "So we're not doing it all as a big bang. We're not migrating everyone across at once. I'm not being complacent and have taken personal charge of these IT projects."
The CIOT will continue to keep a close watch on both of these issues.
CIOT External Relations Manager
Monday 10 October 2011