RTI reconciliations still awry
National press reports this morning indicate that P800s generated out of the new real time information (RTI) system for PAYE include around 5.5m over and underpayments - a slight increase on last year.
After the first year of RTI’s operation, it was hoped the teething troubles employers encountered would at least bring the reward of fewer end of year inaccuracies.
Baker Tilly’s David Heaton told the Daily Telegraph: “RTI was supposed to make PAYE more accurate, not less. So why are there more [errors] this year, with RTI in full flow, than last year, when RTI was only a pilot? The number of PAYE differences has risen, not fallen. Something in RTI is not working.”
The situation will be less of a surprise to AccountingWEB members, who have been reporting reconciliation discrepancies throughout the year. In recent weeks imbs and Moonbeam both had to face third party debt collectors demanding payment for hugely increased PAYE liabilities after HMRC’s computers double-counted their year to date figures.
According to imbs: "RTI cannot cope with the fact that ytd's have been submitted during the year. As a result, in the first month of the new system, HMRC records the accumulated payroll data for the full year so far up to and including the month on new system. As a result, you have a huge liability for one month. This is a widespread problem on a large scale and they are snowed under with dealing with it."
HMRC’s June Employer’s Bulletin also presents an overview of the first year of RTI’s operation - minus the less than flattering figures about the volume of reconciliations.
The bulletin explained that employees will start seeing their tax calculation forms, 31m of which were “successfully” received. Depending on the department’s mathematical formula, that means between 15%-17% of the records failed the reconcile accurately at the end of the first annual RTI cycle.
“As expected with such a major change, there have been a few issues along the way which have affected a small number of employers, However, by working with employers, their representatives and their software providers, we have moved quickly to put things right,” HMRC said.
“The majority of employers have told us that filing their PAYE information in real time had been either very easy or fairly easy to do and most found the processes around end of year much simpler, easier and quicker than completing P35s and P14s.”
The bulletin also includes news of a new Best practice guide for reporting PAYE data “on or before” the payment date. This includes 12 scenarios that have arisen throughout the year, including:
- Dealing with late overtime payments that occur after the period’s RTI submission has been filed
- Reporting “on or before” payments are made to casual employees at the ends of their shifts
- Getting payroll clients to submit their data on time for the payroll provider to meet the filing deadline
- Meeting “on or before” requirements for weekly payrolls when on holiday
- Getting client approvals for RTI submission
Some of the situations are covered by exceptions to the on or before rule for casual and weekly employees, and can be picked up in the next payment run, or within seven days of payment. In other instances, payroll software developers will be pleased to see the department recommending commercial solutions that “make it easy to send the updated information”.