The Revenue’s Technological Ineptitude is why your payroll numbers don’t tally with theirs all of a sudden.
RTI is the biggest overhaul to payroll legislation since 1944. It was introduced a year ago and we are told by HMRC that ‘everything is working well’, so why is it that thousands of businesses are experiencing problems with their payroll all of a sudden?
RTI is a system introduced by HMRC intended to make it easier for businesses in the UK to comply with PAYE reporting requirements. HMRC say that two of the drivers for RTI were getting reliable and accurate data in a timely fashion and to end the finger pointing farces between employers and HMRC where staff had big tax bills arising from earlier years. It has also been designed to support the Government’s new Universal Credit system, which is intended to replace six benefits with a single monthly payment.
This all sounds fair enough but given the Government’s track record with IT projects it has come as no surprise to anyone who deals with HMRC on a regular basis that the system is fundamentally flawed and is still racking up hours and hours in wasted time even though we are now a year in.
Of course, the onus has been on the employers, the payroll administrators’ and the payroll software suppliers to try to unpick the problems and prevent large-scale future hassle for the people who HMRC were supposedly setting out to help.
The main problems have been duplicate entries, people being allocated the wrong tax codes and employers PAYE liability not tallying with the information on HMRC’s new systems.
“It distributes payroll data to about 40 other I.T. systems – therein lies the problem then. It’s not a proper integrated system, it’s a sticking plaster job connecting our huge volumes of data submitted to the old systems which cant deal with it.”
– Accountingweb member March 2014
If you call to discuss the discrepancy with an HMRC adviser the first thing that you are told is that it must be a mistake made by the payroll administrator or the payroll bureau and that HMRC’s numbers are in fact correct.
The next step in the process is for the payroll administrator to call up. They are in turn told that it must be a problem with the payroll software. Which of course it seldom is.
“HMRC tell me that the onus is on me to prove that it is not an issue with my software before they will investigate from their end.”
– Accountingweb member October 2013
Those who know that this is simply not the case and who persevere to get to the root of the problem then spend hours on the telephone to HMRC agents going through payroll data line by line to prove that there are no mistakes at all – neither man nor machine made.
It has been known that at this point some HMRC agents have conceded. When they have nowhere else to turn they say that they are going to ‘pass it over to another department’. Such a department either doesn’t exist or is already drowning in a sea of problems – whichever it is, experience tells you that you are never going to hear from them again. Which is exactly what happens. Nobody hears anything regarding the discrepancy but employers are however getting hassled to death by HMRC’s debt management department for money that they don’t owe.
When these discrepancies result in what the revenue perceive as an underpayment they immediately set the terriers in the debt management department out to pursue the payment. These people are tireless and do not listen to reason – to them everyone is some sort of criminal and has to pay now!
“Taxpayers who suffer errors are being forced to be more tenacious. In our experience HMRC has toughened its stance. It’s almost as if officials don’t read the case file, they just send out a letter demanding payment”.
Telegraph – Accountant comment April 2014
The press and industry professional bodies got involved to try and bring the problems out into the open.
Towards the end of last year the ICAEW spoke to Ruth Owen, HMRC’s head of personal tax and spokesperson for the RTI project. She said that there was ‘nothing wrong’ and that ‘everything was working well’.
The ICAEW suggested that HMRC relax their efforts in chasing underpayments. They said that they should adjust their tone and make sure they were not ‘sticking the boot in’. They warned them that everyone’s time was being wasted and costs were running up.
Ruth Owen comprehensively rejected any suggestion that their own systems were responsible for the reconciliation issues. They said that they had ‘reviewed sufficient cases to be confident that their findings were robust’. HMRC concluded that there was ‘no evidence in the cases they examined’.
“HMRC is in meltdown, although HMRC have not seen fit to fess up yet.”
– Accountingweb member February 2014
ABAB The Administrative Burdens Advisory Board (an independent watchdog created to monitor red tape and the price of bureaucracy on small businesses) said that HMRC had been too slow to engage with them on RTI and could have ironed out so many more wrinkles if they and other stakeholders had been listened to at an earlier stage – like before going live maybe?
ABAB has confirmed that RTI is causing a significant cost burden on small businesses, which is precisely what it was apparently setting out to fix.
“Employers should not be required to adapt their practices to suit a faulty system, the system should operate properly and allow employers to comply with minimal effort without have to consult ever-changing instructions.”
– ICAEW member February 2014
Interestingly, as the stress levels rose within HMRC on the run up to year-end, their staff seemed to start just making the numbers up.
Numbers labeled ‘specified charges’ which bore no relevance to anything were appearing. As nonsensical as the whole situation was it did offer some reason as to why numbers weren’t tallying and why you could never get a straight answer from HMRC as to why this was.
And whilst there’s nothing wrong with a few teething troubles, the sheer arrogance of HMRC, their refusal to take responsibility plus the debt collectors (both those in the debt management department and the henchman that turn up on the doorsteps of the innocent) has been an absolute disgrace.
The only thing that HMRC have in fact got right has been to not enforce the non-compliance penalties of £100 per month for those unable to comply.
Imagine if they had.
So, a question for Ruth Owen, if things have all gone so swimmingly well, why has the non-enforcement of penalties been extended for another 12 months and how come HMRC’s own agents are now telling people to ignore HMRC’s numbers and go with their own?
There would be nothing else to report if we all settled down with the tacit understanding that both the system and the implementation is stuffed but sadly the henchmen are still out there turning up on peoples doorsteps trying to collect money people don’t owe.
It seems that tax officials have become more uncompromising than ever in trying to turn the thumbscrews on SMEs to stop ‘leakage’ from the tax system. They are, as ever, barking up the wrong tree …Starbucks…Google…Barclays…
“Don’t be afraid to complain to HMRC, and write to your MP.”
– ICAEW Tax Faculty Team February 2014