Nearly all employers now report their payroll information to HMRC via Real Time Information (RTI). The introduction of RTI is widely acknowledged to be the biggest change to PAYE since 1944. Most employers started reporting via RTI in 2013 and HMRC has since conducted a post-implementation review. The resulting report was published last week and this shows what went well, and also what didn’t go so well. It explains the ways in which government departments use the information that RTI gives them, and how it may be employed in the future.
Below, are a few of the positive points from the report, explaining how implementation timescales were met and how problems are being addressed.
- “As a key enabler to the UC programme in DWP, RTI met all key milestones.”
- “HMRC and DWP have established a joint team of staff to deal rapidly with referrals from DWP in connection with the real time earnings feed before the earnings in question are used in the UC calculation. This team resolves 98% of such referrals on day one.”
- “We now offer ‘once and done’ support to employers, intermediaries and agents through our helplines and do not refer to cases involving discrepancies as ‘disputes’.”
The report includes some interesting figures relating to discrepancies in employer charges:
- “In 2014-15, of the 1.8 million employer schemes, 37,065 formally disputed their liability to PAYE. In 2015-16, of the two million employer schemes, the number of employers formally disputing their liability was 40,902. Analysis of a sample of closed cases showed that, on average, 78% of the outstanding debt was spurious.”
- “At 31 March 2017, there were 15,302 working unique employer disputes for years 2012-13 to 2016-17 with the total figure for potentially spurious debt of £390m. Large employers account for the majority of the spurious debt but 68% of the schemes in question are small employers.”
- “Duplicated employment records – historically up to 80% of disputed charges were related to this issue. A number of IT enhancements have been introduced to reduce this number to 16%”
The report also shows that HMRC understands the difficulty of having to report adjustments in an EYU:
- “When an employer is asked to correct their account by submitting an EYU and believes the information they have already submitted to be complete and correct, the employer is unable to calculate an adjustment value. External stakeholders suggested that there should be a process for employers to submit the latest position and that it should be possible for our systems to calculate the adjustment required and update relevant systems accordingly.”
Appendix E of the report includes some honest feedback from stakeholders, including the following, from the Administrative Burdens Advisory Board (ABAB), about the need to report information to HMRC ‘on or before’ paying any employees.
- “ABAB consider ‘on or before’ reporting to be unachievable for many small businesses and compliance with the reporting obligation virtually unmeasurable.”
I have presented a few, selected excerpts from the report, with limited context. If you are interested in a deeper understanding of the issues I have mentioned, I recommend reading the full report.