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HMRC’s own first year report: good, but more to do

April 16, 2014

 

HMRC has written its own first year report on RTI. In its latest Employer Bulletin, released on Monday, it has concluded that it has done a good job but acknowledges it still has more work to do.

The Employer Bulletin, which HMRC uses to communicate tax matters to business, stated “Our systems have performed well.  We have successfully received over 31m Full Payment Submissions covering 633 million payments to individuals.”

The statements contrasted sharply with the difficulties experienced by some employers over the week end. RTI submissions were slow to be accepted and once submitted, each return received multiple acknowledgements. They also made clear the scale of the data management challenge RTI has created for HMRC: Within the first 24 months of RTI, HMRC will have over 1 billion payments in its systems.

Although the Government Gateway and HMRC systems have generally been able to handle submissions well, concern remains over their ability to cope with data volumes at busy times when deadlines happen to coincide, such as happened on Friday, one week before PAYE’s first RTI ‘year end’.

The Employer Bulletin looked back at the successes of the first year of RTI reporting and outlined the areas which HMRC aims to improve. HMRC offered thanks to employers and agents for working with them to “design RTI around employers’ payroll processes” and for the high quality of PAYE data submitted in reports – more than 99% of records match to a valid National Insurance number.  This data, HMRC says, is being used to issue tax codes to employees when they start new jobs, to support tax credit claims and to support the Universal Credit pathfinder.

However, HMRC acknowledged that there are still areas of RTI which need improving, including:

  • difficulties and misunderstandings in reconciling the amount of tax HMRC thinks is due with the employer’s view of their charge – and seeing how we [HMRC] might be able to improve the how information is presented on the Business Tax Dashboard
     
  • adding safeguards to our systems that greatly reduce the potential to create duplicate employments.  Employers can help with this too: see the hints and tips at www.hmrc.gov.uk/payerti/reporting/employee-records.htm
     
  • improving both the wording and targeting of our Generic Notification Service messages

Employers with between 10 and 49 employees who previously made use of the reporting relaxation for small businesses were reminded that they would need to start reporting on or before they pay their employees from 6 April 2014, as the limited extension of the reporting relaxation for the 2014/15 year only applies to micro employers with 9 or fewer employees.  Employers were also encouraged to ensure that they are claiming the new Employment Allowance which permits eligible employers to reduce their Class 1 NIC bill by £2,000.

Despite the areas it acknowledges it needs to work on, HMRC appear confident that RTI is functioning correctly and they are forging ahead with using the data from RTI to support the calculation of Universal Credit payments, including details of pay frequency, earnings and deductions. HMRC’s appreciation of its achievement was also apparent in its Corporate Report, ‘One year on: modernising PAYE with real time information’ published on 8 April, which made no mention of some of the issues it has acknowledged elsewhere.

Given the concern leading payroll professionals continue to express that HMRC systems are not accurately reconciling FPS data to employers’ PAYE accounts or calculating the employer charge correctly, HMRC’s confidence is not shared in all quarters.

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