Member Article

We have the technology…

…but apparently we don’t know how to use it, according to HMRC. We are led to believe that problems with RTI would disappear if employers knew how to use it.

The summer saw some RTI problems, with employers saying HMRC’s Debt Management teams were hassling them for non-existent PAYE under-payments, as well as the computer imposing unjustified estimated charges.

HMRC responded with an investigation which showed that less than 1% of 1.6m employers have queried the charges on their PAYE account and the number of queries has recently fallen – this has been attributed to employers getting used to the new system. So HMRC is confident the system is working with only minor hiccups.

The review concluded there was ‘no evidence that HMRC IT systems are calculating the charge incorrectly’. Another conclusion was that a small number of RTI returns weren’t being processed on time by HMRC’s systems.

So two questions:

• If HMRC’s system isn’t processing data from employers, how is the system calculating the charge correctly?
• Also, why on earth is HMRC calculating any ‘charge’?

Calculating PAYE, NIC, student loans, etc is for the employer, so it’s surely not for HMRC to second-guess what the employer might have reported if he’d known what he was doing?

A problem described by HMRC illustrates this. A discrepancy between an employer’s figure and the amount on HMRC’s system was exactly twice the sum of two tax refunds to two employees, so it looked like HMRC had converted negative figures into positives. But it hadn’t.

Investigation showed that ‘there was in fact a duplicate employment and coincidentally the amount of tax duplicated was exactly that sum’.

So HMRC mistakenly showed one employee twice, but the employer’s system would have shown and reported the employee once – they wouldn’t have paid them twice.

The fact that HMRC’s system mistakenly created a phantom under-payment doesn’t really sound like an IT system that’s working.

Why is HMRC’s system making assumptions about how much is due when employers have reported and paid this? The employer may have changed an employee’s payroll ID, or corrected a start date or NI number, but HMRC’s software concludes that the record relates to a separate employee.

Is that a system that’s working, or one so poorly designed that it’s too easy to break?

HMRC and BIS are currently consulting on using the PAYE system to provide employers with funding for hiring apprentices. Until RTI works seamlessly, it’s hard to see how adding more complexity will do anything but add lots of unnecessary work for everyone.

This was posted in Bdaily's Members' News section by Baker Tilly .