HMRC has published proposals explaining the circumstances where employers will be allowed extra time to send real time PAYE information to HMRC following criticism that RTI will be unworkable for many small businesses.

In April 2013 employers will start sending PAYE information in real time. This means it must be sent 'on or before' the date the payment is made.

HMRC has now outlined a narrow scope of circumstances where employers will be allowed extra time to send real time PAYE information to HMRC.

It proposes up to seven days to report PAYE information on payments which vary depending on the work done and where it is impractical to report in real time. Such instances include a crop picker paid in cash at the end of the day, when their pay is based on how much they have picked; or a casual worker in a pub paid at the end of the night.

It also includes payments to employees for whom employers do not have to maintain a Deductions Working Sheet (P11).

HMRC also propose up to 14 days to report payments of benefits and expenses subject to Class 1 NICs but not taxed under PAYE.

Frank Haskew, head of ICAEW tax faculty, said: 'The 'on or before' requirement - even with the relaxation to "within seven days" - will not work for many businesses. It's not yet clear what HRMC will do if faced with widespread non-compliance by employers - will they apply penalties or turn a blind eye? Either way, the requirement could inflict serious damage to the credibility of the UK tax system.'

The taxman will publish draft regulations for comment in mid-November.

In addition, HMRC will issue further guidance on the reporting of ad hoc advances of pay and a statement of operational practice on reporting of payments made by expat employers and those operating share schemes.