NPS: How will HMRC's computer system cope this year?
Annual coding notices started going out last month. With the past year's chaos behind us, Rebecca Benneyworth sets the scene for the 2010-11 year end process.
HMRC's National Insurance and PAYE Service (NPS) system went live in July 2009. This is a massive computer system that now organises them by employee, so that all employments are brought together in a single place. This approach will help employers calculate and deduct tax more accurately, as the system will allocate personal allowances and so on between employments as necessary.
The system was populated with data brought together from the old employer-based computer systems which were held regionally. On the old systems, employees only existed in relation to each employment so it was not possible to amalgamate tax records year by year for those with multiple employments. Consequently, the employee records needed to be reconciled annually – a task which has not been performed for several years.
One of the key migration issues was the poor state of the employee records on the legacy systems. There was a considerable amount of redundant data which was not adequately identified before the migration and this led to significant issues in Spring 2010 when the coding run commenced.
Annual coding run
The 2010 coding run which started in late January produced a very considerable number of issues, with many individuals receiving multiple codes and many of these relating to old employments which had ceased years before. This was caused by a failure to cleanse the employee records adequately before the run was carried out – but HMRC had decided that this was the easiest way to identify all of the issues. It is fair to say that the authority was probably dismayed by the volume of incorrect data they were dealing with.
Information on the 2011 coding run was issued on 14 January 2011. It is anticipated that the coding run will be less troublesome than last year, as much of the data has now been cleansed – some of it manually. HMRC’s announcement states that the IT fixes and manual checking employed over the last year has provided confidence in the records – which have been extensively tested in the run up to the coding run commencing.
The number of coding notices sent to employers this year is a staggering 17–18m. These will be issued between 23 February and 25 March.
The individual versions of these started to be issued on 17 January, and this will run through to 16 March. However, it is important to remember that
, so you will need to ensure that your clients pass these to you – or contact you if they are in any doubt. It is still possible that employee will receive more than one notice of coding – as one will be issued for each source of employment or pension. In particular as some pension providers may deal with a number of occupational schemes, there may be multiple coding notices for a single pension provider, but these will relate to each scheme or payroll on which the individual is included.