Small Companies – New Credit System Effecting Small Firms…
Small firms may face tax repercussions after failing to be told of major welfare changes and the implications these have for them.
The Government’s planned Universal Credit system, which will begin for new claimants in October 2013, will have a massive effect on the way employers report tax deductions. Research has suggested though, that a quarter of small business leaders had not even heard of the new scheme and , of those who did know about it, more than half had not received any information from HMRC.
From next April employers will have to report national insurance and income tax deductions every time they pay staff, not just at the end of the year. A large percentage of small businesses are unaware of this change.
The national chairman of the Federation of Small Businesses, John Walker, expressed his concern over the lack of information provided to small businesses and said the move must be communicated better. He stated that:
“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.”
Commenting on behalf of the labour party, the shadow work and pensions secretary Liam Byrne said:
“Let’s be very clear, if this problem for firms isn’t fixed soon, then millions risk seeing vital benefits disappear into a black hole with catastrophic consequences.”
A HMRC spokesperson replied to the concerns stating that a new communications campaign has been launched, the system was on track and pilots were going well. He added that customer research has suggested that the best time to engage with employers is six months before changes are made, and so HMRC will be contacting small firms in April 2013.