An increasing number of small companies are aware of the Government's impending Real Time Information (RTI) system, but many fear that its introduction in April will cause serious problems, according to the Forum of Private Business (FPB).
It has been one of the main issues to emerge from a study on the IT outlook for small businesses conducted by the membership organisation for small businesses.
RTI is a system created by HM Revenue & Customs for payroll information to be passed on continuously rather than updated monthly. It will demand changes in the way that businesses provide the information to HMRC.
A survey of 4,000 FPB members indicates that awareness of RTI is high, with 70 per cent saying they are prepared for the changes and 18 per cent prioritising investment in technology to cope with the system.
But 65% believe that HMRC would struggle to cope with the changes, even though some had acknowledged that a pilot had run smoothly. 22 per cent claim that RTI will make it less likely for them to take on new employees, although most say it will have no impact on employment levels.
A sensible transition
Phil Orford, Chief Executive of the FPB, said that while the research shows that businesses are better prepared for RTI than similar studies have suggested, there is still a significant number that are unprepared.
"If nothing else, this paints a depressing picture of small firms' confidence in a government department that is key to their operations," he says.
"Those businesses involved with the RTI pilot run by HMRC last year were a little more confident here, but there are clearly still fears about how seamless the transition will prove to be."
He added: "With this uncertainty in mind we are calling for HMRC to adopt a sensible and reasoned approach towards enforcement in the early stages. Already the government has announced the delay to some fining powers, but the effect of the switch to online reporting must not be underestimated, nor the cost of investing in new software ignored.
"Ideally we want to see a moratorium on fines in all but the most serious cases."
In response, a representative of HMRC told TRBC: "Real Time information is on track. We expect around 6 million individual records to be reported in real time by the end of March 2013. RTI will reduce burdens on employers by around £300m every year.
"We want to help and support all businesses to make the change so we will not be imposing any penalties for late reporting until 2014. We are writing to employers again in February 2013.
"We are also making a wide range of information and support available on our website, on social media channels like YouTube, via live and recorded webinars (online seminars) and through regional workshops to help businesses understand what they have to do to report PAYE in real time from April 2013.
"2013 will be a year of transition and HMRC will be doing all that it can to help business make the change."
A spokesperson for the FPB told TRBC that it is not concerned about companies having to spend heavily on IT to cope with RTI, but that accounts departments and staff should be aware of it requires of them. This could involve some investment in training.
The organisation has published a blogpost on the implications of RTI that advises members on the appropriate software settings and types of submission. It also suggests that if the supplier of a company's payroll software is not providing the necessary service it should look for an alternative.