Kate Upcraft sets out her concerns about the standard of employer and taxpayer data held by HMRC.
In my work as a payroll lecturer I meet many agents and employers every week. It became clear from the start of the RTI pilot that all was not well in the HMRC central data systems. That prompted me to bring together the key stakeholders (software developers, rep bodies and agents) to form the RTI Stakeholder taskforce in November 2013.
We are still meeting regularly although HMRC have not participated in the group for over a year now. We are still giving up our time to meet because our clients and members are still dealing with the huge additional admin burden that RTI causes when it goes wrong.
Let’s be fair: RTI is working well for the vast majority of employers and, by extension, employees. Our payroll software is doing a great job of automating accurate submissions and we’ve had no indication that there need to be any changes to software.
What is going wrong?
A number of business-as-usual activities within payroll processing appear to cause issues within the HMRC systems, such as duplicate records. Those problems processes include:
- Change of payroll software
- Change of agent
- Re-employment with the same employer
- Change of start or leave dates
- Multiple changes of personal details in one FPS (name, address and marital status which tends to happen if you get married)
- Moving of records within PAYE schemes
- Payments after leaving
No one knows for sure how many employee records are affected as there are no published figures. HMRC assert that 99% of records are accurate, but they can’t prove that.
If we assume that 95% of employment records are unaffected; as over 60m records are received annually, a 5% error rate amounts to 3m affected employees and their associated employers. An article in the CIOT Journal, Tax Adviser, in November 2015 reported that there were 14m unreconciled records at year end for 2014/15
Is it just you?
Given the number of employers I meet who have experienced the issues that duplicated records cause, I am always surprised when I read posts on AccountingWEB from agents coming across corrupt RTI data for the first time. Those agents tend to wonder if it is just their clients who are affected. The answer is ‘no’.
You probably don’t know if you have a problem with any clients at present as:
- You can't see their PAYE liabilities until the agent online self-service goes live (set for April 2016)
- Few RTI penalties have been issued for the first two quarters of 2015/16 as those penalties are risk assessed and not automated.
It’s getting serious
If you’ve been struggling with duplicated records your problem may be about to assume a different importance: Universal Credit.
The Autumn Statement included the announcement that HMRC will migrate all tax credit claimants to Universal Credit by 2018. That will move the numbers on the new combined in-work benefit from hundreds of thousands to millions in two years flat.
Universal Credit needs clean, regular and on time Full Payment Submissions if the claimant is to get the right benefit at the right time. If earnings are duplicated that means less money to pay rent, childcare and put food on the table; RTI data just got serious.
Where the claimant disputes their earnings their starting point is a payslip or P60. After that HMRC may have to intervene on DWP’s behalf to talk to the agent or employer, to establish what earnings data was sent, as compared to what the HMRC and DWP systems are holding.
HMRC don’t believe there is a problem talking to agents about welfare issues as their starting point will be a discussion about PAYE reporting which is within the agent’s remit. However, you may want to make clients aware that you are straying outside of your original brief to handle tax and NI queries.
The other key takeaway from the Autumn Statement was the massive investment in, and ambitious plans for, HMRC services to go digital. All of these current projects rely on sound RTI data and/or reliable processing:
- Personal digital tax accounts (by the way what happened to showing us our NI records?)
- Quarterly reporting by the self-employed
- A new pre-populated SA return for agents for 2015/16
- A new self-assessment demand from 2016/17
- All CIS returns to be online from April 2016
- Agent online self service
I have three wishes for 2016:
The transparency of RTI data will mean we have an honest debate about data quality;
We will agree a way forward with HMRC that they have been able to resource; and
HMRC will remove any guidance that attempts to handle data issues by asking agents and employers not to submit accurate data, such as change of start and leave dates, and instead write to HMRC.
The Autumn Statement announced that HMRC had completed a review of the requirement to submit ‘on or before’ payment dates under RTI, but that was conducted without any external stakehoIder input. What we need is a full post-implementation review of RTI. That will allow us to consider if the £330m of savings to businesses promised from the introduction of RTI has been achieved, as the Chancellor has promised another £400m savings to business from digitisation.
Next week I’ll consider what lessons we are learning from trying to resolve duplicated records…..Merry Christmas!
About Kate Upcraft
Kate is a technical writer, editor and lecturer on all aspects of employing people - primarily payroll and HR matters.