Good news on RTI – just four years in the making!

In December 2014, HMRC agreed that the EYU (Earlier Year Update) was not fit for purpose and pledged to replace it. The other week, nearly four years to the day, the payroll software developers were told that the plan was that the EYU need not be used any more to correct 2018/19 records after 19th April 2019 and will be withdrawn from April 2020. Whilst it’s a new proposal it certainly seems it’s likely to go ahead.

For this surprising, but welcome, announcement I’m sure much credit must go to behind the scenes lobbying by senior figures within the British Computer Society payroll specialist group, of which I’m pleased to be a just a lowly committee member.

The reason that I’m surprised with the time it’s taken to make this decision, is that HMRC staff request the EYU as much as we employers and agents voluntarily submit them, as it’s their first resort when trying to fix a disputed charges case where they have corrupted the data we’ve submitted on an FPS or EPS. Many of us have resisted their request to submit an EYU from our own software on the basis that our data is not wrong, so why should we provide an incorrect audit trail in our data when we have not caused the error?

So, what will we get instead? Effectively a month 13 FPS will now be able to be submitted – i.e a new file with the correct YTD figures for the tax year, rather than the +/- format of the EYU. We hope the new YTD FPS will be able to be submitted for the first time for 2018/19 after the normal cut off of 19th April 2019. As this is a last-minute proposal, some software providers may not be in a position to offer the new YTD file in respect of 2018/19 so the EYU will remain in place for 2018/19 corrections as will Basic PAYE Tools (BPT). BPT will be updated for 2019/20 and the EYU will no longer be a valid submission for 2019/20 corrections from any payroll software. Corrections for 2017/18 and earlier will continue to be via an EYU.

The announcement has led to a number of questions:

  • The YTD FPS needs to accommodate negative YTD pension contributions as this has been the reason that many EYUs had to be sent. If the employee is auto-enrolled in March then opts out in April, the pension contributions cannot be refunded in May as this will lead to a negative YTD pension contribution value and the FPS does not accommodate negative values
  • Will it still be possible to send a YTD FPS for up to six prior years as is the current framework for the EYU?
  • What is the communication plan for this announcement?

The timing of the announcement maybe coincidental but it came in the same week that the Public Accounts Committee’s (PAC) latest report criticised the standard of PAYE data submitted by employers. This was a direct result of HMRC’s Chief Jon Thompson evidence to the PAC that was highly critical of employers and agents. Those of us who have spent the last five and a half years trying to engage with HMRC to work together on improving their handling of our data were very disappointed by Thompson’s views. If there is such a problem with employers, why was the RTI user group disbanded before the project even went live and has not been resurrected, the only overarching stakeholder group being the Employment and Payroll Group (EPG) that only meets quarterly? We’re also still waiting on the ‘action plan’ that was committed to in the RTI Post implementation review that was published last December and promised a better world by March 2019. The EYU was part of the recommendations, but only part. Incidentally Mr Thompson, that report said ‘the overall incidence of data quality problems is low’, so what has happened in the last 12 months that led to your evidence to the PAC?

HMRC are about to launch their latest digital initiative, MTD for VAT in a few months’ time. Let’s hope they have learned lessons from the rollout of RTI.