HMRC’s “interim solution” to help administer the Department of Work and Pensions’ Universal Credit has come under fire from the payroll software industry. Jon Wilcox investigates the so-called “RTI hash”.
The forthcoming implementation of Real-Time Information (RTI) by HMRC has been the subject of much debate in recent months, especially here on AccountingWEB.co.uk. Having stepped back from relying on the banks’ BACS payment mechanism to run RTI, HMRC recently issued a proposal for a cross-reference between the different systems involved.
Responding to widespread criticism from the payroll industry of its preference for BACS, HMRC announced in May that it would adopt a “revised technical solution” for an interim period. As part of the solution within the RTI submission, HMRC confirmed that it would create a cross-reference field for each employee submission where employees are paid via BACS. This was set out in a technical specification document published on 22 July.
A hash will now be included in the RTI submission to HMRC; [and] a random value inserted in field 7 of the BACS payment instruction, followed by a three alpha-numeric character random string, HMRC explained. Combining this string with other values, including sort code combinations from both the originator’s bank and the recipient’s bank, as well as the amount to be paid, would provide a sufficient degree of uniqueness to allow effective matching to take place, HMRC said.
Yet critics were still unconvinced. AccountingWEB.co.uk member and 12pay managing director Tom McClelland called the latest compromise a “kludge”. HMRC’s decision to go the BACS route suggested the organisation thinks most employers were already paying their employees by BACS - “a key belief so far wide of the mark as to make HMRC's beliefs about every other part of this process utterly suspect”, he added. Not a single user of 12Pay out of around 10,000 companies using the software pays their employees via BACS.