RTI – The ‘What?’Saturday, December 10th, 2011
We have focused on the very brief history of RTI, covering the topic from the time that it was first discussed up to the publication of draft regulations and the call for more pilot employers last month. Much of this information has been for information purposes only, ensuring that we know the answers to:
|Why?||The current system is outdated, times have changed PLUS, DWP need to feed off of HMRC data for their new Universal Credit benefit, effective October 2013|
|Who?||Real time data will be exchanged between employers and HMRC|
|When?||Pilot employers will be from April 2012, everyone else from April 2013. RTI submissions will be made at the time the payment is made to the employee|
|How?||Exchange of data via EDI or the Government Gateway|
The only remaining question is ‘what’ – what data are employers going to have to submit to HMRC? Of course, when we say ‘employers’, we ultimately mean the payroll department, who will be responsible for the data entry and its maintenance. This is the reason for the articles that we have been producing, simply because the payroll department is going to be so fundamental to the success of RTI.
Before we look at exactly what data will be included in RTI submissions, which will be covered in future weeks, we need to look at tidying up the data that we already have. This is one of the things that HMRC have been focusing on in their Customer User Group and Pilot Employer presentations. A Data Improvement Project (DIP) started at HMRC targeted at looking specifically at this issue. They have reported at a number of sessions, all with the same message: – poor data quality will impact on the success of the exchange of information via RTI. If incorrect, or inconsistent data, is held, there can be no hope of matching the records when the data is sent in to HMRC. Similarly, when data is sent back (tax codes etc), this will not be matched by the employer. This will impact as follows:
- No / multiple / duplicate records held at HMRC for the same employee
- Incorrect employment records held at HMRC
- Inaccurate tax codes issued leading to rejections in the payroll and incorrect tax deductions for the employee
- Increased administration at HMRC and employers in an attempt to resolve the inconsistencies. One of the goals of RTI is, actually, decreased administration!
In short, poor basic data will undermine the concept of RTI in terms of HMRC / employer data exchange and also negatively impact the HMRC and DWP data exchange when Universal Credits are live.
The DIP has identified five main areas where they want employers (payroll) to examine and correct their legacy data:
- Date of Birth
- National Insurance Number
At the same time, HMRC are undergoing similar data cleansing in their systems
RTI is an excellent opportunity for us to tidy up our payroll systems. Much of this information is provided by the employee at the time employment starts or, at least, should be provided. Therefore, identifying missing or incomplete data should not be a difficult task, though; certainly it will be a time-consuming one, depending on the size of the payroll. Then, there is the task of correcting the data. It must be remembered that, in many instances, we are reliant on this information being provided by other departments. Maybe it is a good time to tidy up our data flow processes internally at the same time.
On the positive side, we are not in an immediate rush to do it and this is something that can be added to the 2012 ‘to do’ list.
- Payroll Help 28 October 2011 – RTI The Beginning
- Payroll Help 04 November 2011 – RTI – What HMRC Did Next
- Payroll Help 11 November 2011 – RTI – The First Consultation
- Payroll Help 18 November 2011 – RTI – The Consultation Response
- Payroll Help 23 November 2011 – RTI Needs You!
- HMRC - Improving the Operation of Pay As You Earn (PAYE) – HMRC Impact Assessment
- DWP - Universal Credit – Welfare that Works
- HMRC - Improving the Operation of Pay As You Earn (PAYE) – Collecting Real Time Information
- NDS - HMRC Press Statement 04 April 2011
- HMRC - HMRC Statement 13 May 2011
- HMRC - Summary of Responses 30 September 2011
- HMRC – Draft RTI Regulations (PAYE)
- HMRC – Draft RTI Regulations (NICs)
- HMRC – Draft RTI Regulations (CIS)
- HMRC – Draft PAYE Direction (Technical Note)
- NDS – HMRC Press Statement 23 November 2011