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Latest Employer Bulletin shows concerns with PAYE data quality

April 17, 2015

 

HMRC published their latest Employer Bulletin on 17 April. As the publication acknowledges the General Election campaign imposes restrictions, commonly known as ‘purdah’, on what civil service departments can communicate until the election is over and a new Government has been formed. For this reason, say HMRC, this Employer Bulletin (Issue 53) “only contains PAYE information which will help employers meet their payroll obligations to HMRC over the next few months”.

What it does contain is over two and a half pages of guidance notes entitled ‘Running and reporting your payroll – getting it right’. This section of the Bulletin, which begins ‘It is important that you report your PAYE both correctly and on time’, acknowledges that incorrect PAYE data creates issues for employees as well as employers. In a reference to the continuing data quality issues that appear to beset RTI it states: [incorrect data can have] an adverse effect on your employees’ records, resulting in them paying the wrong amount of tax or receiving incorrect amounts of benefits”.

It goes on to say, “To get the PAYE information right, you must get your payroll information right. This is because the information you enter on your payroll goes directly into the real time submissions you send to us, which in turn go straight into our IT system” - but acknowledges that - “Different payroll packages allow employers different levels of control around what information they can add/update”.

This raises the issue of the extent to which PAYE data quality issues arising from RTI may be caused by the differing way in which UK payroll software providers have implemented RTI reporting in their payroll applications. And, additionally, the possibility that the divergent interpretation of HMRC’s requirements by “different payroll packages” may have arisen due to insufficient precision in HMRC’s original RTI reporting specification (and subsequent revisions), which UK software developers were required to follow when they developed their RTI payroll products.

HMRC’s Gov.uk website pages lists 79 commercial UK payroll software suppliers who “produce payroll software that has been tested and recognised by HM Revenue and Customs (HMRC)”.

HMRC has in general tended to blame employers for poor RTI data quality but the possibility that an employer’s choice of payroll software may contribute to the RTI data errors in their PAYE scheme they encounter, following data submission to HMRC, appears to have been raised albeit unintentionally by this Bulletin.

This issue also repeats guidance to employers for a second consecutive issue of the Employer Bulletin on the payment date employers must report in their FPS, stressing it “should be the earlier of the date an employee is paid or the date they were entitled to that payment, not the payroll run date, or another date from your payroll system”, referring employers to page 5 of the February Employer Bulletin (Issue 52) and HMRC’s standard What payroll information to report to HMRC guidance pages on Gov.uk.

That after 2 years of mandatory reporting of PAYE in real time HMRC has still repeatedly to clarify which payment date employers should report does appear to suggest that the quality of RTI data “is not as clean as they need to work properly”. This comment, given by Chas Roy-Chowdhury of ACCA to AccountingWEB and previously reported by PayeRti.org does appear to encapsulate the current position on RTI data quality.

The Bulletin also provided helpful guidance - see page 7 - on how to use the correct payment reference when paying PAYE due to HMRC. The failure to use the correct payment reference for every payment of PAYE, which must identify the tax month to which the payment relates, can immediately cause errors in an employer’s PAYE account. Where an employer’s payment reference does not correctly identify the tax period to which it relates, HMRC may allocate the payment to a prior PAYE period not the one to which the employer intends.

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