Partner Article

RTI doubts grow

HMRC took some criticism last week from the National Audit Office (NAO) which cast doubt on some of its decisions on RTI, and some of those doubts seem to be borne out by user experience.

The NAO reported in one paragraph that HMRC’s RTI pilot was successful, albeit with fewer employers recruited than planned – only 66,000 instead of the targeted 250,000 – but then in the next paragraph stated that the scope of the pilot was limited ‘which means that certain functions of the system have not yet been fully tested.’

The pilot covered initial validation of employer submissions of data to HMRC, but testing of all data transfers from RTI to the main PAYE system, known as NPS, did not start until RTI had gone live. Given the number of incorrect tax codes that have been issued over the last three months, it must be doubted whether the interface is working as hoped.

The NAO also questioned the lack of accreditation of the financial and accounting systems supporting RTI. It seems RTI went live in the knowledge that HMRC was expecting to have resolved ‘identified financial design issues’ only by 31 October this year. How serious a problem this might be is emerging slowly as employers and payroll operators’ comments on incorrect HMRC records of payments begin to mount.

HMRC’s Debt Management team have been contacting numerous employers to ask why they have underpaid their PAYE liabilities, sometimes by significant amounts: double or triple the true liability has been reported as showing on HMRC’s systems. Somewhere along the line, numbers submitted have been posted more than once by HMRC’s computer.

More worryingly, HMRC’s system has been applying guesstimated liabilities to some employers’ records, allegedly because no filing has been made. These are known as ‘specified charges’, which are supposed to be added only when the employer has not paid the expected amount of PAYE due. Even more worryingly, HMRC has not been able to explain why some of these have been applied and has then told the employer that the responsibility to prove that the payment was correct lies solely with the employer, despite the error appearing only in HMRC’s records.

It is to be hoped that the NAO carries out a follow-up audit very soon.

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