In the last couple of weeks we’ve been working closely with HMRC around Real Time Information and in particular how important payroll providers are in helping communicate what employers should be doing to prepare for this legislative reform.
Now normally I have the concentration of a three year old, getting distracted very easily but it was with great interest that I listened intently about how important it is to ensure the data you store about your employees is accurate.
Why it’s important to make sure your data is accurate
Under PAYE Real Time Information, the information you submit to HMRC every time you pay your employees is matched against records HMRC store on their National Insurance and PAYE Service (NPS). If the records you submit do not match, you may trigger the creation of duplicate or inaccurate records. This could result in incorrect tax calculations or HMRC compliance checks.
Got a spare couple of minutes listen? Then watch the HMRCs advice on data quality
Did you know that……..
Over 80% of data quality problems are caused by holding incorrect information about an employee’s name, date of birth or National Insurance number? Here are some of the errors from the 2009/2010 tax year:
- 824 employees with the surname ‘Unknown’, 7 ‘Known’ and 15 ‘Not Known’
- 572 people who surnames only included X, ranging from ‘Mr X’ to ‘Mrs XXXXXXXXX’
- 507 employees called A.N. Other
- 160 surnames of ‘Test’ and 100 with ‘do not use’
- 128 staff entered Mr, Ms or Mrs ‘Dummy’
- 75 staff with the surname ‘Casual’, 11 ‘Cleaners’, 9 ‘Workers’ and 6 ‘ Students’
- Over 2,000 with an NI number of AB123456 and 1000 with a NI number of AA111111
- Forty employees were apparently over 200 hundred years old
Is data quality really any issue?
Does that look like a lot of errors considering there are 29 million or so employees in the UK?
Probably not at first, but on reflection under RTI you will be submitting more often, with tighter deadlines. The temptation to create more shortcuts when you take on new employees or client’s payroll could increase. So, this problem can quite easily be exacerbated in a really short period of time with employees potentially having multiple records at HMRC resulting in incorrect tax deductions and problems when applying for benefits.
Some simple Do’s and Don’ts of recording employee names
- DO – enter the employee’s full forename and surname.
- DO – enter a double barrelled forename or surname in full.
- DON’T – use known as, for example, if HMRC know the employee as ‘Robert’ don’t use ‘Bob’.
- DON’T – enter an initial in either the Forename or Surname boxes.
Some simple Do’s and Don’ts of recording employee dates of birth
- DO – enter the correct date of birth and ensure it’s in the format DD/MM/YYYY, for example 05/05/1985.
- DON’T – enter a default date of birth, such as 01/01/1901, or make one up.
Some simple DO’s and Don’ts of recording employee NI numbers
- DO – only enter an employee’s correct National Insurance number.
- DON’T – make up an employee’s National Insurance number.
What about Accountants and Payroll Bureaux?
You’re integral in ensuring your clients’ employee information is accurate and failure to ensure this may impact on getting their payroll paid on time.
Tip 1 - Familiarise yourself with RTI (check out my post on Real Time Information – An Accountants’ View) and take a look at the processes you use with your client, for example taking on new employees or updating existing employee information. Ensure that your clients provide you with accurate data.
Tip 2 - Communicate and educate your clients about RTI and how it’s important their data is accurate and delivered on time.
Neilson Watts, Sage Payroll Expert