COMPLIANCE
“From my experience within the pilot programme, it allowed us to get ahead of the competition before the live roll- out, but also to guide and shape real time information into how we perceived it would be used in the real world”
short notice. The complexity of the move away from end of year reporting to real time was significant, and eventually a pilot year was introduced which employers and software suppliers could opt to be a part of. In the end, about one in six software products took part and, from my experience within the pilot programme, it allowed us to get ahead of the competition before the live roll-out, but also to guide and shape RTI into how we perceived it would be used in the real world. Move forward a decade, and our payroll product now supports more territories; namely, Republic of Ireland (ROI) and the Crown Dependencies of Jersey, Guernsey and Isle of Man. Although the latter three aren’t as overly complex as the rest of the UK, it still isn’t easy to find information. Our principal source of information came from CIPP’s payroll courses, which established the fundamentals and provided links with where to keep on top of future changes. Revenue Ireland doesn’t have a dedicated support team like HMRC, and so payroll software developers have come together to form their own collective – the payroll software developers association (PSDA). This is very active and does a wonderful job lobbying the Revenue on the group’s behalf. This most recently proved useful when the ROI decided to introduce statutory sick pay (SSP) into the payroll system from 2023 (previously employees would claim any SSP directly from the government). Payroll developers were notified about a year in advance but the guidance on how SSP would work still wasn’t clear by the end of the year. As a result, all members of the PSDA collectively agreed that the products which each represents wouldn’t support payrolling of SSP until the guidance was clearer. It highlighted how well the UK supports payroll developers. Ultimately, HMRC seems to have this one right: the engagement with the software development community directly correlates to improved tax collection and increased accuracy. So, next time your payroll software doesn’t calculate or behave as you might expect, bear in mind that the development process of turning guidance into code isn’t always that clear cut, and it’s better to work with your payroll provider to establish the facts than to assume they’re wrong. n
an exam-like set of questions would be issued, and payroll software houses would have to complete the answers regarding what their software calculated, covering pay as you earn (PAYE), National Insurance (NI), statutory sick and other family pay, attachments of earnings and more. There would also be an annual in-person visit, where a team member from HMRC’s software development support team (SDST) would review the software with the developers and give advice / guidance on how to improve areas such as validation. There was even an enhanced version of the Standard where optional features could be included on the accreditation, should the software support them. This incentivised payroll software developers to push their products further to be competitive. “The real bonus from the developers’ point of view was that HM Revenue and Customs was actively engaged” Ultimately, the point was this: the more compliant the payroll products on the market are, the more revenue the government can bring in from employers. It became unthinkable that serious payroll developers wouldn’t get their product on that list, knowing that it was a hard-earned accolade, and that their competitors would likely be on it. And the real bonus from the developers’ point of view was that HMRC was actively engaged – the team in the SDST understood the nuance of payroll legislation, far more than the helpdesk that employers would call in the event of a query. This meant that payroll developers were able to build relationships inside
HMRC and get advice and guidance on some real edge case scenarios, ensure their software was accurate and know they had the backing of the very body which created the rules. Over the years, due to changes in government and cutbacks, the Payroll Standard was eventually abolished, and the face-to-face visits were scrapped. The annual accreditation still exists in a cut- down self-assessment format, and the list is now software that’s ‘recognised by HMRC’. Interactions with government departments The company I formerly ran was one of the first to obtain the Payroll Standard and, when real time information (RTI) was introduced in 2012, we were one of the first to join the pilot year before it went live in 2013. Back then, there were over 600 payroll software providers on that list; tough competition and acquisitions have reduced it significantly in the past decade. Indeed that business, Carval Computing, was acquired itself by Civica. I have no doubt that the end goal of ensuring more money comes into the Treasury remains the driving force behind this, but it has been interesting to note how consistently good HMRC continues to be in terms of providing information as early as it can. This ensures that we, as payroll software suppliers, can be looking into new legislation, or changes in guidance, with plenty of time to turn it into compliant software. And, most importantly, HMRC understands that this takes time. There’s a reason payroll software can be expensive and why that list of providers has reduced so dramatically in the past ten years. It was notable, for example, that when RTI was being introduced, that HMRC initially wanted to go live with it at the start of the 2012/13 tax year. It was one of the biggest changes to PAYE in decades, and payroll software developers came together to lobby the government that it was too
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| Professional in Payroll, Pensions and Reward |
Issue 94 | October 2023
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