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PAC says HMRC must continue to support SMEs with RTI transition

December 20, 2013


In its report on HMRC’s annual accounts, the Public Accounts Committee has praised HMRC’s implementation of PAYE RTI but has emphasised that HMRC must continue to support SME businesses and help to address issues caused by RTI.  The report criticised several areas of HMRC’s performance, including: their track record on identifying potential tax credit fraud and error; their failure to recover more tax from Swiss bank accounts held by UK taxpayers and their failure to anticipate the way new legislation designed to make the UK more friendly to international businesses could also present opportunities for multinationals to avoid tax.

The PAC said that the implementation of RTI had “gone well so far”, and that the Revenue had “used [the] pilot to learn lessons which assisted the full roll-out.” However, the PAC has recommended that HMRC improve the disaster recovery mechanisms for RTI, which went live without full technical resilience.  HMRC launched RTI without full technical resilience because discussions with other departments had not “identified a need for the system to be available at all times.”  Its current disaster recovery mechanisms, which allow a week for technical issues to be fixed, have been deemed sufficient to support other departments at the moment. 

HMRC told the PAC that it:

had not experienced long-term or on-going problems with RTI; however there had been specific problems which it has addressed through its continuity arrangements such as returning temporarily to the old PAYE system.

Additional technical resilience to support Universal Credit could be added later, HMRC said.  The PAC’s recommendation was that “HMRC must undertake work necessary to improve the provision for disaster recovery within the RTI system to ensure that correct payments to claimants will continue in the event of a system failure.”

Regarding the issue of RTI systems going live without financial accreditation, HMRC said that financial accreditation represented a “gold standard” for their financial systems, and had “no impact on what the customer sees or its ability to collect taxes.”  HMRC told the PAC that it can “identify overpayments and underpayments sooner than under the old PAYE system”, but that it has “committed to add financial accreditation to RTI”.

HMRC’s summer RTI survey, which received 24,000 responses, aimed to “find out what burdens and difficulties [businesses] faced” when managing RTI reporting.  The PAC recommended that HMRC analyse the data from this to “help it understand the problems faced by smaller businesses struggling to adopt RTI, so that it can continue to provide them with effective support.” 

The PAC’s guarded praise that HMRC’s implementation of RTI had “gone well so far” also recognises the reality that most employers up until very recently, have had little or no awareness of how HMRC has been managing their PAYE data. It is only with the launch of HMRC’s generic messaging service that shows an underpayment of PAYE on the employer’s PAYE account on HMRC’s systems on 17 December that, for the first time, most employers can see whether or not HMRC has correctly reconciled their PAYE returns since April 2013.

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