Astonishing: Working Benefit Claimants To Face Financial Penalties If Their Boss Files Tax Information Late

OOB refers to the requirement that payroll data is submitted On Or Before the date employees get paid.

Chaos is on the way for the lowest paid workers as new rules come into force which link payment of vital in-work benefits to employer’s compliance with providing tax information on time.

From this month almost all employers will finally be expected to provide payroll data to HMRC every month as part of the Real Time Information (RTI) system. This change has already been introduced for larger employers but businesses with nine or less employees had been given a 12 month ‘easement period’. That ran out on April 6th this year.

For those on low incomes this payroll data will be used to calculate their entitlement to Universal Credit.  If this information is not filed on time then bosses are warned by the DWP that their workers may: “receive too much or too little Universal Credit”.  This means those with irregular hours and earning patterns, such as people on zero hour contracts, could be left up to several hundred pounds short at the end of the month. For workers dependent on benefits to meet rent payments this could prove devastating. Try explaining to your landlord that you can’t pay the rent because your boss didn’t file their tax return on time this month.  Of course some claimants could also end up receiving too much Universal Credit and not know why – or even that they have – calculations are already breath-takingly complicated.  This will lead to involuntary debt and unforeseen repayment demands in the future.

Perhaps the most chilling problem is that many bosses just don’t care about their employee’s in work benefits. Research published by HMRC late last year found a small number of ‘micro’ businesses had no intention of changing their payroll systems to meet the new requirements – as the quote above this post demonstrates. Many more employers were still confused about the changes, or were not even aware that Real Time Information was being introduced. Others said they could’t afford updated IT equipment to run the software required to manage this reporting system. Some claimed that only one person does the payroll returns and if they are off sick then it doesn’t get done.

When it was pointed to these non-compliant businesses that late reporting would affect the payment of in-work benefits to staff the employers fell into two groups according to the researchers. There were those who said they would strive to comply with the new system so as to not affect their employee’s income. And there were those that were ‘unconcerned’.

In a meagre effort to make them more concerned HMRC have introduced a penalty system for employer’s who don’t provide payroll information on time. It is, as you might expect, a bit of a joke. Employers will not be fined if it’s the first time they’ve filed late that year. Even then they will be able to appeal due to ill health or IT difficulties. And the fine is just £100 for the smallest employers and a trivial £400 for those with over 250 employees. This is likely to be considerably less than the financial penalty that workers could face for their employer’s negligence.

Despite several HMRC reports into the introduction of Real Time Information there appears to be little information being published on how many businesses are compliant with the scheme all of the time. If only a tiny percentage of employer’s file information late – because they are careering out of business anyway for example – then this could impact on the impact of tens, or even hundreds of thousands of people. Errors in the system alone are likely to lead to significant suffering and confusion. For anyone who’s ever had a real job or had to deal with inept Jobcentre busy-bodies the end result is easy to imagine. When payments aren’t correct the DWP will blame your boss and your boss will blame the DWP. The worst kind of employers may just sack workers who get too uppity about PAYE information being filed late. And then possibly lie to the Jobcentre about why they left and cause them to lose eligibility to benefits completely. It is an astonishing amount of power for an employer to hold over their workers.

In the mind of bungling toff Lord Fraud, the unelected Minister for Welfare Reform who helped design this new system, bosses are all wonderful people who would never abuse their staff and always pay their taxes on time. Recent revelations about the UK’s own Prime Minister shows what bollocks that is. But so entrenched is the capitalist class’s delusion of their own fucking wonderfulness that they are now designing administrative systems that depend on this honourable behaviour amongst the rich.

You don’t get rich by behaving honourably though. You get rich by using every tool you can find to dominate and exploit those surrounding you. And as more people are slowly transferred onto Universal Credit then they will be more vulnerable to exploitation and abuse by their employers than working class people have been in generations. Behind all the lies about making work pay and incentivising hard work, that is the real reason for the Tory government’s welfare reforms.

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