RTI should mean “Read This Immediately”

RTI ACTAULLY MEANS: REAL TIME INFORMATION
The onus will shift considerably on to company directors and employers with the introduction of Real Time Information (RTI) in April 2013. HM Revenue & Customs (HMRC) is bringing in an enhanced reporting scheme which will require all employers to report their tax and NIC liabilities every month – ahead of actually paying their employees.

The implementation of RTI is mandatory without exception between April and October 2013. It will be the largest single overhaul in this area since PAYE was introduced in 1944.

At TMP, our expertise and knowledge as turnaround professionals can be used to steer you through the implications of this radical shake-up.

Impact on HMRC

According to The Telegraph, HMRC is hoping its introduction will help to reduce a £3bn payments backlog, although research shows that the full implications have yet to register with many companies. When the system has been implemented, it is likely that businesses will save significant amounts in reduced administration costs. However, immediate costs will be incurred in overhauling systems and investing in payroll software.

According to a recent survey by the Federation of Small Businesses (FSB), only 16% of its 1,700 members were prepared for RTI – and a quarter were not aware of the impending changes.

Impact on Companies

At TMP we believe that the introduction of RTI will have a significant effect on many UK companies. Over the years, we have seen many situations where companies have not had to reveal the true extent of their HMRC liabilities, until after the end of each tax year. One effect of this has been for these companies to delay corporate distress.

This has resulted in a massive cashflow advantage, particularly in smaller companies. There will now be no hiding from the full extent of Crown liabilities. This will require a marked improvement on cash monitoring and control in many companies. In some situations, it will accelerate the need for turnaround finance.

How TMP can help

TMP can work with you to look at any given distressed situation. RTI may lead to a greater number of insolvencies, but we can help you avoid this by focusing on cash control, turnaround finance and, if necessary, negotiation with HMRC. As a priority, we would always work with company directors to avoid a formal insolvency process.

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