Save content
Have you found this content useful? Use the button above to save it to your profile.
data collection | accountingweb | Improving the data HMRC collects: a focus on changes for real time information
iStock_alllex_data

Will RTI reporting changes improve data quality?

by

HMRC may be committed to improving the data it collects, but the new requirements might be a touch too far for some payroll service providers.

1st Nov 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

Outlining changes HMRC wants to make to data collection, the government response to the consultation Improving the data HMRC collects from its customers was released in April 2023. The Chartered Institute of Payroll Professionals (CIPP) and its members are particularly interested in the changes to real-time information (RTI) reporting. 

HMRC proposed requiring a numerical input of hours worked, rather than continuing the use of the current system of banding the hours worked. Additionally, band “E – Other” would be split out into exemptions to provide more clarity as to why a figure can’t be provided. 

The response concluded: “Employers are already required to keep records of the hours their employees work to satisfy NLW and NMW rules, and in some cases, display this information on payslips. Respondents also confirmed that employers will hold details of contractual hours worked for payroll purposes.

“The government will therefore proceed with collecting improved data on employee hours worked. This will request information on contractual hours worked where those contractual hours are reasonably stable (such as not a zero hours contract) and actual hours worked for hourly rate employees, which will be proportionate and minimise additional burden. HMRC will work closely with businesses and software providers to ensure clear definitions and requirements and adequate time for implementation of changes. The government intends to share draft legislation for technical consultation on this change with affected businesses and organisations in the coming months before including in a future Finance Bill.”

CIPP think tank

HMRC approached the CIPP and asked us to run a think tank for our members on the proposals and to collect further information on potential barriers. Naturally, we pushed our luck and asked for two sessions instead – one for in-house payroll professionals and another for those in a bureau or accountancy practice environment. This is due to the vastly different ways they’ll have access to, or control over, the data collection processes necessary to comply with the new rules. 

Luckily, HMRC agreed, and we ran the two sessions, allowing members to come forward with their views, concerns and questions. 

Many questions from attendees centred on which hours should be included and what happens when a worker is off sick, or when hours are worked but not paid? Additionally, what can be used for workers who are paid daily rates?

This highlighted the serious need for clear and informative guidance on the matter – something that’s applicable to any change HMRC pushes out, to be fair, but one that needs stressing time and time again. Thankfully, the HMRC representatives were keen to take these suggestions on board, and to build further examples and case studies for use in the guidance. 

Mandatory numerical declaration 

The main concerns from bureau and accountancy practice attendees were mainly focused on the action of getting the data from clients to be able to satisfy the proposed regulation. 

As I’m sure you’re aware, if a client doesn’t provide the data, you subsequently can’t provide it via RTI. But these proposed plans will make a numerical declaration mandatory, so how will we move forward? Attendees suggested that a figure may end up being provided, but the validity or accuracy of that figure may not be where HMRC expects it to be. This would result in additional data requirements, which wouldn’t necessarily improve the quality of that data, far from the aims of the new policy. 

Outsourced payroll providers fed back that this inaccurate data could lead to HMRC opening compliance action based on such data. As the responsibility for providing accurate information would still sit with the employer, this isn’t something that’s likely to directly impact providers, but could have knock-on impacts on client relationships. 

From the government response above, we can see that HMRC is of the opinion that the data it is asking for is readily available and easy to calculate. As this data should already be collected for national minimum wage calculations, is HMRC right in its thinking? Do businesses need to suck up any administrative burden as it’s what they should have been doing all along, or are the new requirements just a touch too far for some payroll service providers?

Tags:

Replies (15)

Please login or register to join the discussion.

avatar
By AdamJones82
01st Nov 2023 15:52

What's the point, they don't even use the data they get know for anything of use.

Sometimes takes six months to get previous tax year's Employment API data!

Thanks (9)
Replying to AdamJones82:
avatar
By Mathew Akrigg CIPP
02nd Nov 2023 14:17

This was a big concern and something we are definitely keen to understand from HMRC. What will this data actually be used for? At the moment that is unclear beyond "improving the data that is held by HMRC".

Thanks (1)
Replying to AdamJones82:
avatar
By Mathew Akrigg CIPP
02nd Nov 2023 14:26

This was a big concern and something we are definitely keen to understand from HMRC. What will this data actually be used for? At the moment that is unclear beyond "improving the data that is held by HMRC".

Thanks (0)
Replying to AdamJones82:
avatar
By Vjacob
03rd Nov 2023 12:03

6 months? It has taken them 18 months to respond to my request, and it is clear from my attempts at correcting our PAYE records on HMRC’s side that their current systems are creaking. Data comes in and is transferred from one legacy system to another, and HMRC staff are unable to explain why this is not a perfect process where some transactions get stuck and don’t make it through to the online account. It would be nice if they can sort this out before asking for more data!

Thanks (1)
Replying to Vjacob:
Pile of Stones
By Beach Accountancy
03rd Nov 2023 16:32

So under MTD all our transactions have to be digitally linked (not even cut & paste), but HMRC can do what the hell they like. Any then they wonder why we complain!

Thanks (1)
avatar
By Open all hours
02nd Nov 2023 09:29

If resources could be focused on solving the numerous problems HMRC already have it would be appreciated.
Breaking new ground simply in order to sow more weeds is really not necessary.

Thanks (9)
avatar
By listerramjet
02nd Nov 2023 10:03

There surely has to be questions about purpose and proportionality, not to mention cost. Why do I sense scope creep?

Thanks (3)
avatar
By Mr J Andrews
02nd Nov 2023 10:15

One really needs to read this article a few times to realise the complete and utter waste of time in detracting resources to come up with unreliable results following another HMRC whim.
For anyone who has read the Consultation , the joke is in the Revenue thought process in collecting such data is to ''........build a trusted modern tax administration.........and enable better outcomes for
''customers''.....'
Come on Mathew, was it really a good idea to succumb to the request to form a think tank for this specific issue whereas a think tank into generally improving the way HMRC is administered would have been the correct way forward ?

Thanks (7)
Replying to Mr J Andrews:
avatar
By Mathew Akrigg CIPP
02nd Nov 2023 14:00

We absolutely think it is a good idea to take the opportunity available to us to provide HMRC with feedback on specific issues. This doesn’t mean that we also don’t feedback about general administration and customer service issues. The CIPP sits on a number of HMRC forums for specific and general issues around payroll and will continue to feedback concerns in the best avenues possible to represent our members and the wider payroll community as best as possible.

There were some very interesting points made by attendees on the sessions which were delivered directly to the representatives for HMRC. It would be irresponsible not to give our members that opportunity and have HMRC charge forward with reduced information about the actual impacts these proposals would have.

We were lucky to have Angela MacDonald, Deputy Chief Executive and Second Permanent Secretary at HMRC, deliver a talk at our annual conference; she provided an honest and frank account of HMRC’s current struggles and issues. The concerns of payroll professionals are not going unnoticed and the CIPP will continue to be a ‘critical friend’ to HMRC, balancing understanding of the constraints they are under while pushing for better outcomes for taxpayers and employers.

As we continue to work alongside HMRC, we hope to be invited to form think tanks with our members around a number of issues and will gladly accept in order to give the payroll profession a voice.

If you have any concerns that we could raise with HMRC please do feel free to email [email protected]. We can’t promise that it will be resolved, but we can pass the feedback along and use your information as part of future engagement and consultations.

Thanks (0)
Replying to Mathew Akrigg CIPP:
avatar
By johnjenkins
02nd Nov 2023 14:32

With the greatest respect to what you are trying to achieve, Mathew, I and many others have found that HMRC just aren't interested. Apparently they see posts on this site so they know the problems, but choose to totally ignore what we say. Even the PAC have stated that things ain't right.
Let's look at it from another angle. What should HMRC be doing and what is getting them into trouble?
They should be investigating and collecting.
They are trying to administer stuff that will not work MTDQU, IR35, AML etc. etc.
So the answer is very simple. Let us do the admin and decide what will and won't work. (HMRC should not decide employment status, it is a commercial decision).
OK we're not perfect but I'm sure we won't get our tax system in the total shambles it is now.
With HMRC concentration on investigation and collection the coffers should swell unless they [***] that up.

Thanks (1)
avatar
By johnjenkins
02nd Nov 2023 12:06

Whenever you start getting rules and regulations "for the benefit of the customer" it doesn't take long before everybody disappears up their own backsides. Soo nobody will be doing any "work" just making sure they're compliant for the sake of compliance.

Thanks (2)
By coops456
02nd Nov 2023 13:06

Totally agree with AdamJones82.

What does HMRC currently use the banding for, and what is the benefit of collecting more detailed data other than for research purposes - zero tangible business benefit.

As a payroll bureau, it would be difficult to obtain this information for salaried staff across all our clients, and highly unlikely to be accurate on a monthly basis.

With luck, the proposal will not make it into a Finance Bill before this rotten government is removed.

Thanks (2)
Replying to coops456:
avatar
By johnjenkins
02nd Nov 2023 13:20

Unfortunately it is this "need" for control that is damaging everything. It's worldwide. Time for a "new" way forward.

Thanks (4)
avatar
By adjadj
02nd Nov 2023 15:37

Key to this is understanding what the data is to be used for and thus how accurate it needs to be. If an employee has a pay rate of say twice the National Minimum Wage then there is no need for hours to assess NMW. Why require everyone to provide hours when they are only relevant in NMW scenarios?

Working remotely is commonplace and many people are in effect paid on the basis of getting the work done rather on hours worked. In these scenarios hour worked become pretty meaningless . It hours become mandaory then the quality of the data is liely to be rubbish

Thanks (1)
avatar
By sheila t
06th Nov 2023 14:55

I don't even keep track of the exact hours I work myself, so the figures for my own company will be dodgy before I even look at those of the clients

Thanks (0)