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Employers hit by BACS costs for RTI

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5th Mar 2013
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UK businesses are facing costs of up to £30,000 to ensure their BACS software is compliant with real time information (RTI) requirements for PAYE.

The RTI Software Costs Survey, carried out by the CIPP and Payroll Alliance, found many employers have incurred charges to upgrade to more sophisticated software with additional functionality.

In particular, the survey revealed 42% of respondents paying via BACS will be incurring extra charges to include the hash total in field 7 of their BACS file, which is required by HMRC in order to enable them to match payments against the RTI submission (FPS).

Of those paying to upgrade, 39% spent between £1,000 to £4,999, while 8% paid £7,000 and £30,000.

However, an HMRC spokesman told AccountingWEB that these costs only apply to the small number of employers who pay their employees by BACS using their own BACS Service User number.

These tend to be the larger employers and do not apply to businesses paying employees by cheque or internet banking.

“The actual cost of BACS software and BACS software services will depend on the details of the commercial arrangement between employer and the service provider.

“BACS Approved Software Suppliers tell us that the costs associated with providing the additional information required for real time information for field 7 of the payment instruction is low or negligible,” he said.

Around 27% of employers said they were paying to upgrade their payroll software.

Payroll Alliance’s Linda Pullan said: “While we accept that some employers have upgraded to more sophisticated software with additional functionality, it is clear that many companies have incurred unforeseen costs. In some cases, employers have had to pay large amounts to make sure they are fully compliant with the new regulations.”

In total 156 respondents took part in the survey; 66% of which were employers and 71% used BACS to make payments to employees and pensioners.

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Replies (11)

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By taxhound
05th Mar 2013 18:47

This can't possibly be right

Because HMRC promised us it will save us time and money - £350m I believe......

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By neiltonks
06th Mar 2013 00:46

HMRC

Surely HMRC can't be blamed for BACS software suppliers deciding to cash in by charging large upgrade fees?

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By markfd
06th Mar 2013 01:07

HMRC can't be blamed...

...when they introduce new regulations that, surprise surprise, cost money to comply with?

err, yes they can.

Thanks (5)
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By Peter Tucker
06th Mar 2013 14:01

Chewy Moments !!

Chewy Moments

I would urge everyone to listen to the Radio 4 PM broadcast of 5th Match 2013 - www.bbc.co.uk/pm - and 26 minutes into the program hear Linn Homer telling us all that there may be a few "chewy moments" when RTI begins in April.
She goes on to say that RTI is a "well piloted scheme" and in essence all is well.
The BBC reporter concentrated on the effect of RTI on small businesses and he is desperate to get the views and opinions of larger employers, as there is a suspicion in the non-payroll world that the arrival of RTI may not be as welcome as HMRC senior management believe.
if you would like to express your views on the Pilot - in total confidence, with an Actor speaking your words then contact [email protected],

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By daveforbes
06th Mar 2013 17:05

BACS software

At one stage under RTI everyone was going to have to pay by BACS. At least HMRC saw sense on that one.

What exactly does BACS software do differently under RTI ? The payroll software has to produce a "hash tag" in the file sent to the BACS software which is then transmitted, as it was transmitted before RTI.

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By Neil Daws
07th Mar 2013 16:06

RTI

Who came up with the idea of RTI in the first place - the Revenue or software suppliers?

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By Jane Green
14th Mar 2013 12:42

BACS software

Company turnover under £2m but it's costing us £2490 to upgrade our BACS package.  Unfortunately we are a labour intensive business so it's not practical to pay every individual by internet banking so we're stuck with it.

What benefit are WE getting out of it - absolutely none.  A total waste of money. Blatant profiteering by the software companies.-

There may be economic benefits to the country as a whole through RTI but PLEASE don't tell us that employers will be making savings.

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By my colleagues' a geek
05th Apr 2013 12:02

RTI - Comfirmation that BACS submission to HMRC was successful?

Hello

I wondered if anybody knew how we can be sure that the new BACS file that has the 'hash' in, has been successful.  We are reliant on the software provider submitting the information to HMRC, but how can we be sure that it is correct? Should we get some sort of confirmation back to say it has been submitted?

 

Our provider is NatWest Payaway IP Direct.

 

Thanks very much

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By gcorner
14th May 2013 11:26

The Hash Tag is created using a combination of the amount paid, the sending and receiving sort codes and the four character has itself.  The eventual tag submitted is based on an established algorithm which every software house and inhouse developer has to align to (I think HMRC have stated it's based on SHA256 - that's your software provider's issue, not yours by the way!). 

Once your RTI submission is sent out, it goes through a 3-stage validation process at the HMRC end and this includes an acknowledgement in some cases and where necessary, an exceptions/rejections file with any errors it encounters during validation.

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By Accesspay
15th Apr 2014 11:20

Like the Post

Nice post on a real matter of concern.

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By Accesspay
15th Apr 2014 09:17

BACS Payment Services in UK

Going with the flow of fellow members, we definitely agree that the administration cost of maintaining any BACS approved software is huge. We too provide BACS approved payment solutions and spend a fortune in making the software hassle free with bank-grade security and 100% cloud-based payment solutions. Additionally, the BACS approved payroll software has to produce a "hash tag" in the file sent to the BACS team, before submitting the same to the RTI. All these systems build up the cost of maintaining the software.

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