In September, HMRC announced that the new in-year penalties for sending late PAYE returns under RTI would be introduced in stages.
The penalties were expected to come into force for all employers on 6 October 2014, but shortly before the implementation date HMRC decided to operate a phased-in approach so that employers with fewer than 50 employees will only face the automatic in-year penalties from 6 March 2015.
This came as a most welcome announcement and relief for advisers, employers and payroll administrators. The hope is that HMRC will now use the time before March 2015 to assist small employers with the problems they have experienced in filing under RTI.
Earlier this year I became a member of the RTI Taskforce. This group consists of tax advisers from both large and small firms, payroll administrators, representatives of the professional bodies and software providers. The group is different to the usual consultation forums as it was initiated by its members, rather than HMRC, who are invited along as guests. It has been somewhat of an ‘eye-opener’ for me to hear about the range of problems agents and payroll administrators have been experiencing with RTI and that 18 months down the line, there are still a good number to be resolved.
This is particularly startling in light of the number of instances where HMRC are proposing to use RTI data to improve services in other areas, such as tax credit renewals. Even the new process for dealing with deceased employees, where the requirement for form R27 (asking for details of income to date of death) has now been removed, is based on the assumption that data can instead be obtained from the RTI system.
These are all reasonable aims to have but the concern is whether HMRC, by building on the RTI system and interrogating its data so soon after implementation, are placing too much reliance on it at this stage.
RTI has in the past few weeks received some negative coverage in the national media due to the fact that around 20,000 incorrect P800s were sent out to taxpayers as a result of data from the RTI system. The ATT issued a press release commenting on this media coverage and calling for the inclusion of external specialists to be included in a review of the RTI system in order to restore public confidence.
In HMRC’s recent news release announcing the deferment of in-year penalties for small employers, Ruth Owen stated that ‘over 95% of PAYE schemes making payments to individuals are successfully reporting in real time, and 70% say it is easy to do’.
There is obviously room for improvement on those statistics, especially if the resulting data is to be used for a number of other purposes. The last thing any of us want to see is a situation where there is a mass of incorrect penalties being issued or incorrect awards of universal credit being made, which would result in a greater loss of confidence in real time reporting.
Both sides need to maintain an open and honest dialogue in order to progress this matter and work on ways to keep improving the system. It is in the interests of all parties involved.
One issue which keeps cropping up is the use of the Earlier Year Update ("EYU") form. It would appear that where HMRC realise their data does not match an employer’s data they are asking employers to file EYUs in order to rectify the problem. One would naturally expect that HMRC’s data can only be that derived from the employer. Quite how this mismatch occurs is a mystery. The EYU form was designed to allow an employer to file amended figures where it had made a mistake; it was not to enable HMRC to tidy up their own data. Putting that argument aside for the moment, if the EYU form allowed an employer to show total amended figures it would seem to be a way of ensuring that HMRC and employer figures could successfully be matched up in this way. However, the form asks employers to show the difference between the previously recorded figures and the new revised figures; not the new revised total figures. Therefore, when HMRC ask an employer to complete an EYU form in order to match data, it is impossible for the employer to know what figures to input without knowing what data HMRC already hold.
General opinion, certainly amongst the RTI Taskforce members, is that redesigning the EYU form so that total revised figures are recorded, rather than differences, would be a quick win for HMRC and lead to less confusion all round.
There are many other examples I could mention here and I’m sure readers could suggest a few themselves. HMRC insist that ‘RTI’ as a project is coming to an end and moving over into ‘business as usual’. It is therefore perhaps time to start raising these issues across the board wherever
possible. One such avenue is to record instances of problems and issues via the ATT ‘Working Together Forum’ and I would encourage readers to start doing this by logging on to the following web page
By Alison Ward
Alison is one of the Association’s Technical Officers and represents the Association on the RTI Task Force.
For more information, please contact Irfan Qureshi, Marketing Officer.