To introduce our new specialist payroll contributor AccountingWEB asked Kate Upcraft to give us an update on the issue that is causing accountants the most concern: RTI. Here are her thoughts.
The rationale for the move to file payroll data at the time of the pay run rather than annual filing was two-fold:
- To improve the operation of PAYE as more accurate data would flow to HMRC more regularly; and
- For that accurate data to pass to the Department of Work and Pensions (DWP) to help calculate and validate universal credit (UC) awards.
We all have our views on whether the first objective has been achieved, but we have perhaps lost sight of the vital importance of the second objective to employers, claimants and politicians?
Let’s consider “improving the operation of PAYE”:
- The payroll software industry spent millions on upgrading software and we learned all its new intricacies and prayed too it was sending what HMRC wanted although we weren’t quite sure they knew that themselves and worry they still don’t
- We diligently updated all our employee data and sent it to HMRC to ‘align’ records. Now the latest Employer Bulletin urges us not to send some accurate data as to do so will cause duplicate taxpayer records
- Sending real time earnings' data has led to an increase in P800s post-year end – 5.5m were sent last year and HMRC had to admit that even these were wrong for some taxpayers
- The data or the central systems are now so fragile (we don’t know which but my guess is both) that the compliance regime is in tatters – late filing penalties having a retrospective tolerance to October 2014 and automated late payment penalties abandoned.
So how does this sit alongside a national rollout of universal credit that began last week? The entire process relies on accurate, timely and verifiable earnings data to deliver the right amount of UC each month, and more importantly cut the £3bn of error and fraud in the welfare system.
Perhaps it’s just as well that UC wasn’t ready to roll in October 2013, at least we now are fully aware of the UC disputes that are likely to come our way as agents and employers.
With duplicate records still muddying the waters, there is a growing realisation that using direct/indirect BACS payment mechanisms may be the only way to provide certainty of earnings to DWP.
Most members of the RTI project team in HMRC have now moved on to other projects and the Customer User Group that advised on the project as it developed has been disbanded as HMRC now considers the system to be PAYE business as usual (BAU).
I feel for those HMRC officials who have had the hand grenade lobbed over to their side of the BAU trenches. They now have to wrestle with hundreds of payroll systems and thousands of users all interpreting HMRC’s data needs differently. Internally, that data feeds into as many as 200 central HMRC systems and a new accounting system (known as ETMP) that is beset by issues of its own.
HMRC said the post-implementation review set in motion by the 2014 Autumn Statement won’t happen yet as it’s too soon - even though the pilot began three years ago this April.
Many businesses and accountants out on the frontline find it hard to swallow the current situation as “business as usual” and will be hoping resources can be found to deliver improvements to PAYE before it grinds to a halt altogether. We’ve all invested too much in this for this to be the end game.
Kate Upcraft AMBCS is the author of the Payroll Unplugged blog and will be continuing to cover RTI and other payroll issues for AccountingWEB. Do continue to keep us informed of your payroll experiences and problems and will ask Kate to look into them in more detail - Ed.)