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Inland Revenue payroll accreditation: The developers' view

With pressure mounting on corporate payroll managers and software developers as mandatory electronic efiling for PAYE returns looms in the 2004/05 tax year, software developers are beginning to voice concerns about the Revenue's approach to standards and accreditation.

Dennis Keeling, chief executive of the business software trade body BASDA, said the complaints reflected major problems. "This is a legal requirement, it's not voluntary."

There are two aspects to the official approval system. Most importantly for those who need to file P14s and P35s for the new tax year, software needs to revenue Revenue approval for online submission.

What is causing a stir in the industry is the full blown Inland Revenue Payroll Standard, which covers a much wider range of functions and quality benchmarks. According to Keeling, "The payroll standard seems to be taking on an undocumented life of its own. The accreditation is taking place within the Revenue and it appears testers are looking for things that aren't documented in the standard. even though members have passed the standard, they are having to keep up to date with changes. A lot of developers have decided they're not carrying on with it."

Support for Keeling's view comes from Simon Parsons, head of payroll processing at Ceridian, a major player in the corporate market. The Revenue's payroll standard is designed to help small and medium-sized companies choose desktop software, and does not reflect some of the more sophisticated applications provided to employers with 250+ employees, who are required to start efiling this year.

For example Parsons complains a payroll program for local government payroll has to be able to calculate directors' NICs, even though there is no need for it. "Big players don't presently get on the list although their products are amongst the best available to meet industry needs," says Parsons.

According to Parsons, the Revenue quality standard doesn't test employer needs or anything outside the IR interest. "The Revenue think payroll is purely about tax and national insurance, but that is only a small part of it."

To ensure their clients meet the May filing deadlines, software developers typically try to deliver software in January and February. That will give the users time to install the new code in time for the beginning of the new tax year.

The PAYE efiling gateway will go live at 9am on Wednesday 6 April. While there is a non-live testing site, BASDA reports complaints from some members that they are having to adapt to late, undocumented changes - and this may lead to problems should customers encounter glitches on the live site.

Sage's business development manager for HR and payroll, Greg Ford, acknowledges that the opening of the PAYE web gateway on 6 April will be a big challenge - but more for payroll managers and software users than developers.

Payroll specialists usually wait to the last minute to file their year-end returns, so they have as much time as possible to carry out reconciliations and fix problems. "If you process weekly payroll on Thrusday, you're going to have to complete the run, pay your people and submit the year-end returns within 24 hours - that's a big challenge," said Ford.

With the biggest number of payroll records in the marketplace, Sage has worked with the Revenue to reduce the minor errors, such as illegal characters, that can lead to failed submissions. It has enhanced its payroll programs so that people can continue to process payments while they're still working on the year end.

Sage has not had problems with payroll accreditation, Ford said. "Yes, the payroll standard is important, but organisations that provide payroll software need to look at it as a way to be innovative and use that technology to take employers further."

Keytime Systems, too, had no complaints about the payroll accreditation process. Managing director Anthony Boggiano attended a recent meeting about it with the Revenue, where he estimated there were roughly 100 attendees. "In terms of setting a standard, it's a good thing, but its beginning to be less of a differentiator," he said. "Sage and IRIS and all the major suppliers are keeping up with it. If Sage has it nailed, that doesn't leave much room for anyone else."

AccountingWEB.co.uk 18-Feb-2005
Categories: Tax Administration, Software, Finance, HR/Legal
Story read 2085

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User Comments

Share your views with other users:

legal notice

Number of comments: 2

User Comment Bharat Vithlani, 25-Feb-2005

IR Payroll Standards not a hindrance
The Inland Revenue Payroll standard is designed to ensure that the software is capable of calculating all aspects of the payroll data accurately to the nth degree. One of the issues is that IR Payroll Standards includes calculations for functionality that some smaller employers may rarely use, however developers will have to include these functions. Importantly, an employer purchasing the software that has achieved the IR Payroll Standard accreditation can use it knowing that �it does what it says on the box�.

For most developers, developing different versions for a specific type of employer is out of question, so they will develop one version that covers all the calculations required by the payroll standards. Most software will include additional functionality to suit the target market.

Having been involved with development of Andica Payroll Software http://www.andica.com/andica_payroll_software.html that has gone through the Inland Revenue Payroll Standard accreditation and the Inland Revenue online filing accreditation, I feel rather than being a hindrance, the IR Payroll Standards and the online filing tests are benefiting developers and providing a confidence factor to users.

It is important for employers to be aware that while the online filing will become mandatory for payroll software, the IR Payroll Standards is not a must at present. Most payroll software vendors will have some form of online filing capability, there are only about 30 that have achieved both the accreditations. Inland Revenue lists software that has achieved IR Payroll Standards on http://www.inlandrevenue.gov.uk/ebu/acclist.htm

User Comment Jon Roberts, 24-Feb-2005

Weekly payroll end of year problems
Interesting to see the comment made: "If you process weekly payroll on Thursday, you're going to have to complete the run, pay your people and submit the year-end returns within 24 hours - that's a big challenge," said Ford, of Sage.

This is not a problem for Datafile Software payroll users. They simply run the weekly payroll, and the system automatically creates a history file so that the information can be processed later and filed on line prior to the 19th May. Of course the payroll managers can run the normal payroll the following week. What is the challenge!

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