RTI poses risk to PAYE system
The real-time information (RTI) environment planned for HMRC’s PAYE Online portal could undermine data quality and needs to be thoroughly tested, according to the National Audit Office.
In its report on HMRC’s accounts for the 2010/11 financial year, the NAO noted that the tax department had made “significant progress in stabilising its administration” of PAYE after the disastrous logjam created last year when records were shovelled without validation from old systems into the new National Insurance and PAYE Service (NPS).
This corner-cutting resulted in more than twice the expected number of tax code amendments - many of which were wrong. Some 7m items arising from 2008-09 returns had to be removed from the workflow queue and rescheduled for processing in August 2010. HMRC has not yet completed work on the backlog.
The NAO report commented that HMRC has a “significant” amount of work to complete to stabilise PAYE on the NPS system by 2013 - a year later than the resolution demanded by MPs - and that this stabilisation will be key to introducing RTI.
The NAO added that the change in the frequency of information passed to NPS from RTI will increase the number of in-year changes in PAYE records and could potentially “introduce further challenges to data quality”.
HMRC needs to “define its operating model for PAYE and how it plans to transform that model as it moves to the RTI environment” and test the robustness of its RTI implementation plans, the NAO report said.
The accounts show that HMRC spent more than £1.05bn on technology during the 2010-11 financial year.
This article is based on a report that appeared on PublicTechnology.net.