I will seek to keep my comments as brief as possible. Some serious and genuine concerns have been raised about the clause, which deals with the transfer to a real-time information system for PAYE. It will authorise additional regulations that will require  employers to provide HMRC with full details of all tax, national insurance and other deductions from income at the time of payment.

Real-time information will be the biggest change to PAYE since it started in 1944. It will replace the obligation on employers to submit a single year-end return with a requirement to report to HMRC, normally on or before the making of a relevant payment to an employee, details of pay, tax, national insurance contributions, student loan deductions and other data in respect of each payment. The report will be known as a full payment summary.

For many employers, the increase in reporting burdens could be considerable. For example, employers with weekly paid employees will now have to submit returns to HMRC up to 53 times a year, rather than once. For employees paid daily, up to 366 returns a year will be required. The new regime will clearly be a huge responsibility for businesses, and there is some concern that HMRC may have underestimated how much it will cost them. Will the Minister tell us how he calculated the cost to businesses of the RTI system? Has he considered their case when drawing up the regulations?

The time frame within which businesses will be required to comply is tight. It will be impractical to meet for those who do not use computers in their businesses, who do not have broadband access or who pay workers before the payroll is computerised, as is common in the hospitality and harvesting sectors, where workers are paid at the end of their shift on the basis of hours worked or amount picked. It will create additional expense for those who do not currently use payroll software or have broadband access, or who need to use third parties to compute payroll and submit the necessary FPS.

While we welcome the extension of the deadline for notional payments to potentially 14 days after the end of the tax month, it is only a partial solution to the problems that employers might face. It is insufficient to cover all notional payments, because the deadline of the 19th of the month will create an unnecessary and potentially expensive burden for employers, owing to the need to run payrolls to collect tax on the notional payments outside the normal running schedule in cases where there is no actual payment to the employees from which to deduct the tax.

There will, in many cases, still not be sufficient time to obtain the information and input it into payroll or make an actual payment to an employee in time to meet the deadline. That is why HMRC has long operated easement, allowing NIC on marginal items paid late to be accounted for in the subsequent pay period. Even longer is needed for cross-border employment and for share-related payments, as they require the employer to obtain evaluations and work out how many shares to retain to cover the tax and NIC.

Frequently, the employer will not realise that a PAYE liability has arisen where the notional payment arises from exercising an option by an employee, especially if the employee is overseas and employed by a different company or branch. Does the Minister recognise that the requirement could be difficult for some businesses to meet? Has he considered alternatives or the possibility of a longer period? If businesses cannot or do not comply with the requirements, will they be issued with automatic penalties? There is no indication at this point  of whether there will be a reasonable excuse provision with which to appeal against those penalties. Such an excuse exists for late personal tax returns, and it would be sensible if such provisions were to exist here as well. Why has there not been a clarification on whether such appeals would be possible? What is the Government’s intention?

I am sure that businesses will be grateful for information on that point. While RTI may have many benefits, we need to ensure that the system is workable. I hope the Minister will respond to the points that I have raised about the difficulties that the clause as currently drafted could pose.