How the Revenue's RTI systems work

As part of AccountingWEB’s investigation into real time information, Nick Huber looks into the technology that drives HMRC’s PAYE reporting processes.

The introduction of real time reporting (RTI) was intended to simplify HMRC’s fragmented PAYE computer systems. This would reduce tax-code errors and support the universal credit, which has been delayed, by linking the tax and benefit systems.

After 70 years of operation, PAYE was a creaky process that relied on annual reconciliations. Under RTI, employers send information about tax and national insurance they deduct from employees’ wages to the Revenue when they are made. With these “real time” updates already in place, laborious annual reconciliations should no longer be needed.

After nearly a year of operation, however, accountants and employers are still complaining that RTI is producing duplicated employee records and other payroll data errors it was supposed to eradicate.

As part of AccountingWEB’s ongoing review of RTI we asked, is the technology to blame?

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Comments
carnmores's picture

Tax codes    1 thanks

carnmores | | Permalink

are now in a bigger mess than before and one of the reasons is overzealous officials coding out 'BIK' that qualify for relief , such as travelling and entertainment. perhaps an amendment can be made to the form to say that they were W&E for business purposes

Tax Codes

halesir | | Permalink

Employer client asked me last week if the 14/15 K code of K13322 which his maintenance fitter had received was likely to be correct? I said "unlikely" as it means he has deductions exceeding £143,000!! Employee hadn't queried it with HMRC as he didn't understand it!!! How many more are there out there in exactly the same position who are going to suffer unnecessarily through HMRC "Computer" ineptitude?

.

ireallyshouldkn... | | Permalink

"It distributes payrolI data to about 40 other IT systems"

Therein lies the problem then.  Its not a proper integrated system, its a sticking plaster job connecting our huge volumes of data submitted to the old systems which cant deal with it.

Huge numbers of errors therefore will be an ongoing issue, no matter how good (or bad) the IT provider, as any fule will tell you in computer design unless you hold each data set once, and you can only change it in one location it won't work properly. 

 

 

johnjenkins's picture

Where I know

johnjenkins | | Permalink

HMRC is incorrect and I am 100% sure that I do know the correct code I have always used my own code. I've never once had any problems.

How stupid can HMRC be. Client received incorrect code. We used the one we knew was correct. Submitted tax return. All ok. Halfway through following year they made the same mistake and issued incorrect code, Admittedly this has only happened once but you can't help thinking what is going on.

Old Greying Accountant's picture

The stupid thing is ....

Old Greying Acc... | | Permalink

... tax cannot be more than 50% of gross pay, regardless of the K code!

Johnjenkins, I always used to    1 thanks

monksview | | Permalink

Johnjenkins, I always used to use my own code if I knew they were wildly out but with RTI I thought I ought to stop this practice.  The result is I have a ton of stupidly, obviously, incorrect codes, each one of which needs a phone call to HMRC to put them right.  So bloody time consuming, what an absolute waste of time.

RTI

Rozzo52 | | Permalink

In general terms submitting data online to HMRC does save time, however my take on the incorrect Tax Codes and duplicate records is a data validation issue probably something to do with system design and certain manual processes of HMRC not being properly documented before writing the computer program for these processes. So who is to blame for this not sure.

No reference numbers!    3 thanks

GRETTONPARTNERSHIP | | Permalink

Today I received an email from HMRC telling me I had missed a deadline for filing under RTI. I process payroll for several businesses. Of course the email had no name or reference number on it! Which business does the email refer to? Do they think I am a mind reader? Quite possibly it relates to a business where I asked HMRC before last April to cancel the PAYE scheme.

Is HMRC really daft enough to send an email with no reference or was it a fake? Well most of us know the answer to the first question!

RTI    4 thanks

cfm-taxassist | | Permalink

The RTI system, like so many modern computer systems, shows all the signs of having been designed by technical people, with a bias to HMRC/DWP "requirements", rather than people who really understand the real, down to earth world that has to operate it.

Would it really have been that bad to have one, comprehensive submission each month, due before 19th and reporting to the previous 5th, i.e. to line up with payment deadline.  This would give payroll operators time to resolve issues, do away with the ridiculous: submit FPS(s), submit CIS return and, oh, do we need to do an EPS as well?, and still give much more up to date information.

Euan MacLennan's picture

Probably fake

Euan MacLennan | | Permalink

GRETTONPARTNERSHIP wrote:

Today I received an email from HMRC telling me I had missed a deadline for filing under RTI. I process payroll for several businesses. Of course the email had no name or reference number on it! Which business does the email refer to? Do they think I am a mind reader? Quite possibly it relates to a business where I asked HMRC before last April to cancel the PAYE scheme.

Is HMRC really daft enough to send an email with no reference or was it a fake? Well most of us know the answer to the first question!

See the RTI e-mail thread in Any Answers.

RTI

sasoolka | | Permalink

Completely agree, would make life so much easier

raybackler's picture

Got a reminder with no references too    1 thanks

raybackler | | Permalink

It looks official, but if it is a fake it is an excellent fake.  It has an e mail address that is @gateway.gov.uk, which is the same one used for confirmations of PAYE RTI submissions.  As we act for about 60 clients, it would be nice to have a clue who they are talking about.  We keep meticulous records to ensure all RTI filing confirmations are successful, so I am sure it is either a defunct PAYE client or an annual payroll.

Monthly submissions for NO employees ....    1 thanks

mike19444 | | Permalink

I now have to file monthly returns despite the fact that my company has no (zero, none) employees.

How crazy is that?

 

Monthly submissions for NO employees

Henri-Hound | | Permalink

 

I totally agree nil returns are crazy.  I have a Company with subcontractors operating CIS but no employees at the moment I have to also file a Nil return each month.  Unfortunately it must be filed by 6th of month but I am unable to send it prior to the 6th because of the CIS return for some reason you are unable to file the return, I use payroo and have been advised by them that I have until the 19th of the month to file the return BUT have been advised by HMRC it must be filed on or prior to 6th of the month so if the CIS return ends on 5th of the month have to file the return on 6th the day after if not I will be fined when the new penalty is imposed not much leeway and a lot of hassle for a NIL return!

Mid Year Change of Payroll Bureau    1 thanks

JB44 | | Permalink

We have become aware of a fault with RTI in dealing with records being migrated to new software (i.e. from one bureau to another) during a tax year. RTI seems to be corrupted by disparities in the referencing used by different payroll software packages, resulting in excessive demands for unpaid tax due to duplicated records. We are also struggling to get any clear advice from HMRC on how to resolve the problem. Until then the message must be, avoid taking on new payroll clients until the tax year end.

Jacqui Brennan's picture

Its not a fake

Jacqui Brennan | | Permalink

Queried with HMRC today and the email is designed to be sent to the inbox of the employer, but like the old unreferenced letters, it has also been sent to agents who are registered on the HMRC portal.

 

More notices!

GRETTONPARTNERSHIP | | Permalink

Client phoned up today and had received email from HMRC about lack of returns. It said they wrote to her in June and September. Client says that she received no such letters or emails. We process the payroll and have all the receipts for the RTI submissions. Do HMRC really think their systems are working? Are we going to be told again to just ignore their notices?

RTI - If It Ain't Broke Don't Fix it etc etc ...................

spurs1952 | | Permalink

Oooooh ahhhhhhhhhh  errrrrrrrrr   - hang on a minute !!!!!!

Another Generic Notice?

Kate Horton | | Permalink

We too have received an email today from HMRC warning that we've missed a deadline and that they wrote to us in June 2013 and September 2013 to tell us.  Apparently we still haven't made any electronic PAYE report in real time this year!  As Gretton Partnership mentioned on their post, there is no scheme numbers or any reference whatsoever.  What a shambles!

 

Apologies, I've just seen Jacqui Brennan's post.  What now then?  Could refer to any client.

What system?    1 thanks

RobSmith | | Permalink

There's no system. No thought. No control.

Why do they have several databases at PAYE? I still have a handfull of clients where HMRC have my old address. How can this happen?

Why do they keep losing payments made by the client? I have one client where HMRC have even reallocated payments from one month to several others in some random splatter-gun exercise, when all payments have been made on time and I've got the IR references to prove it.

Why is there no Agent's dedicated line? It takes half an hour to get through to some poor sod on the other end, who usually ends up in tears after I've finished with them.

I've now had two letters telling me the client has overpaid on PAYE. .. An actual factual letter! As the client is CIS and is a Limited Company, of course he's bloody overpaid on PAYE. And aren't they just telling me what I've already told them through RTI? Who thought it was a great idea to SEND ME A LETTER to tell me what I already knew and had already told them?

It's a complete dog's breakfast.

And the Conservatives had the brass neck to get some out-of-work actor posing as a business-man to tell us on their party political broadcast that they were reducing red-tape for SMEs. Lying bastards.

response from HMRC

Kazmc | | Permalink

I forwarded our emails we received yesterday (the one that says we have not filed any submissions and they wrote to us in June & September blah blah) to HMRCs phishing Dept and this is the response we received today.......

 

 

Thank you for contacting HM Revenue & Customs.

 

The e-mail you have received was sent from HM Revenue & Customs and is nothing to be concerned about.

 

If you think you have received the email in error please contact us directly. HMRC contact details are published within the link below: 

 

http://search2.hmrc.gov.uk/kb5/hmrc/contactus/home.page

 

Regards

 

HMRC Online Security Team

RTI

Rosalinda Taylor | | Permalink

The theory behind RTI is good and I am for it. The problem is penalty. The legislation states that RTI submission is due on or before payment of salary to each employees. ( please correct my interpretation if this is wrong.)  My question is how can HMRC would know when an employee is paid to enable HMRC to charge penalty for late filing. If for example, an employee's normal payment date is the last day of the month, but he was not paid until two days of the following month. Employer submits RTI when he paid his employee. As far as the HMRC's computer sytem is concern, the submission is late and penalty is sends out. I have noticed this problem during the time when HMRC were sending penalty notifications in February. I studied all of these penalty notifications. My observation was that HMRC was looking as the normal submission date and when there is a change as in my example, the notification for penalty was sent out.

My suggestion is to follow the reporting system of CIS ( once a month).

My other question is; Do you we have the right to appeal against penalty? With various errors and problems, i beleive we should have the right to appeal.

Apart from my concern reagrding penalty, in my experience so far, I beleive RTI will work. However, we are only a small practise. We only have 200 payroll with less than 50 employees.

Please do not comment on my spelling and grammar. Useful comment is welcome.

 

Tax Office and Tax Credits - nDuplicate Records

davekee | | Permalink

Hi,

Today, we found a bug in the system, TAX Credits Office receive  data from the Tax Office, for peoples "Earned Income", the scenario is as follows:-

I am a Mrs J KEENAN, who works for a company, another person also works for the company called MRS J KE*****, . They send in data for this, Tax Office Create a Duplicate Record.............

Thus, earned income goes to £47k rather than £16k ??????????????

 

No admittance,8 weeks to solve, meanwhile, said 1st person is going without Tax Credits, due too the fact that they took all as OK............. said person has no money for her and  her  kids. ???

 

Cheers.................Dave