HMRC has a page on their website that explains how the Real Time Information (RTI) system of paying PAYE deductions works.
There is no hiding place for understating what you owe on PAYE until the end of the year. All deductions must be paid over to HMRC at the same time as the payroll is run (weekly, 4 weekly or monthly).
Purpose of RTI
The purpose of RTI is to streamline the process of paying tax but it is also meant to help the implementation of the Universal Credit which is being brought in by the Government. As such, mistakes on PAYE will mean that some employees may have mistakes on their working benefits as well.
There will be additional burdens on business in that anyone who is employed will need to be included in the PAYE scheme whether they are earning under the NIC threshold or not. Also there needs to be an "alignment exercise" as all employee records for payroll will have to match those held at HMRC i.e. correct spelling of names and accurate up to date addresses.
What if you can't pay PAYE?
HMRC will ask you to apply to the Business Payment Support Service for a time to pay arrangement. This will mean that businesses can agree to pay off any arrears over a short time table to avoid penalties. However, any failure to keep up with these agreements will most likely mean a threat of a winding up petition or distraint.
If you think that you will struggle to meet any time to pay arrangement then call us on 08009700539. A company voluntary arrangement could be an option that will mean that the company does not have to pay back all of the PAYE it owes. This is as long as the company is viable as a going concern.
The exact impact of RTI on struggling businesses is unknown but it is likely that HMRC will start to put more pressure on companies that do not pay their PAYE. Read the article and comments on accountingweb that may shed some light.
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.