MTD Pilot: Tax return pre-population data released
While there has been much talk about the additional burdens of MTD, one aspect that will help accountants is the planned availability of taxpayer data direct from HMRC’s system.
Agents will be able to click a button and download PAYE information held for that taxpayer, and this can then be dropped straight into a client’s tax return. Five new API data feeds have been part of HMRC’s MTD testing program (see my other blog here), and these services should be rolled out over the next few weeks.
What data will be available?
The details of the five new feeds are shown below:
Individual employment - a simple list of the taxpayer’s employments during the tax year, with employer name and PAYE tax reference.
- Individual income - pay from each source of PAYE employment, plus income totals from private pensions, incapacity benefit and jobseeker’s allowance.
- Individual benefits - any benefit-in-kind data reported to HMRC (on P11Ds) for each employment.
- Individual tax - tax deducted at source from each source of employment income, plus totals deducted from private pensions and Incapacity Benefit.
- National Insurance - if a taxpayer has income from both employment and self-employment, this API returns the total earnings for Class 1 NIC purposes and details of any Class 2 NICs due.
In addition the existing marriage allowance API, first launched in October 2016, will still be available. This states whether the taxpayer is currently claiming the marriage allowance (either as transferor or recipient), and whether he or she is eligible to make a claim for the tax year.
How can these feeds help me?
The five new API feeds provide information to pre-populate areas of a tax return. Your software provider can stitch together data from the various APIs to create near-complete employment pages. The feeds also provide the information required on private pensions, incapacity benefit and jobseeker’s allowance on the main SA100 form. It should be easier to obtain this data direct from HMRC than from the client, and its accuracy makes enquiries (and possible penalties) less likely.
How do accountants access the data?
HMRC has introduced a two-step verification process to access the data feeds. The agent is initially redirected to a login page and asked to enter their Gateway ID and password. They will then be asked to set up a second tier of security, and can choose for login codes to be sent either to a landline, a mobile phone or a verification app such as Google Authenticator or Authy.
Once this set-up is complete, and a code received and entered, the agent can authorise the software to access the specific data feed. This authorisation will last for eighteen months, far longer than the ten hours previously used for the marriage allowance API. The authorisation allows access to data for all clients for which the agent has an appropriate 64-8 in place.
When will the data be available?
The new data will not be immediately available on 6th April each year. Most of the information comes from the PAYE system, and this data is only complete once end-of-year submissions have been made. The final deadline (for P11D data) is 6th July, and some employers may submit figures after the deadlines have passed.
It also takes time for HMRC to reconcile the PAYE data and make the information available to the MTD system. This process will only start on 6th June, and there is a limit to how many records that can be reconciled per week. If HMRC is expecting a P11D the system will hold off from reconciling the taxpayer’s records until after this deadline has passed, and in some cases may need to run a second reconciliation if further data is received.
So this combination of reporting lags, plus the large volume of data to process, means the full API dataset will only be available a few months after the end of the tax year. HMRC is reluctant to say exactly when, but presumably most of the data will be available by August following the end of each tax year.
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So when will the new feeds be launched?
HMRC is starting a “controlled-go-live” rollout of the five new pre-population feeds, with this scheduled to start in the next fortnight. Initially data will only be available for years prior to 2016/17, but information for the most recent year will be added over the coming months.
So it should all be available and fully functional in time for the busy season - but let’s not worry about that quite yet.