HMRC has published its post implementation review (PIR) of the PAYE real time information (RTI) programme. While some time has passed since Spring 2016 when the Tax Faculty presented our evidence both oral and written (ICAEW REP 163/16) to HMRC’s review team, much of what we said then still applies and we are delighted that HMRC has published its report.
We welcome the candour of the report and the focus on lessons to learn, for example the need for all versions of HMRC’s records to be consistent and for agents to be able to view them, and the acknowledgement of the doubts expressed over burdens/savings. There are lessons for Making Tax Digital (MTD) and it is good to see them identified here.
The object of the PIR was to address the following:
Did the programme achieve what it set out to do?
The report says that:
Tax Faculty comment: We presume that it is only the year one cost saving that was negated by transitional costs, but remain sceptical over whether there really are ongoing cost savings. We should welcome clarification of how the figures have been arrived at.
How is RTI performing more than three years after it started?
Tax Faculty comment: We are not convinced that RTI is working as smoothly as this summary suggests. In HMRC’s records there are still too many instances of duplicated employments (especially following employer payroll software provider changes or business restructurings) and incorrectly recorded liabilities and payments, which continue to lead to inappropriate (and sometimes distressing) contact from HMRC’s ‘field force’ (ie in-house debt collectors) which makes employers who use agents think that their agent has done something wrong.
Also it should be borne in mind that the large absolute number of PAYE schemes and individual employee records means that expressing error rates in percentage terms can overshadow the fact that a small percentage of errors impacts a huge number of individual records.
What needs to be done to improve performance and make best use of this strategic asset for government?
Tax Faculty comment: We welcome the recognition of shortcomings but are concerned that some of the proposed solutions outlined in the report will not resolve underlying problems even if they are delivered by the target date of 31 March 2019.
For example, we have long expressed the view that the earlier year update (EYU) should be changed so that users input what the figures should be rather than by how much the figures in HMRC’s records, which are not necessarily known by employers and where available may be wrong, should be changed. HMRC told us in late 2014 that EYU redesign was being worked on, so we are disappointed to read in the PIR report (in Appendix B) that the latest change proposal is limited to making HMRC’s figures more easily accessible.
What do you think of how RTI is working now and of the PIR? Please post a comment below.