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Revenue payroll testing upsets software suppliers

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The Business Software Developers Association (BASDA) is writing to the Inland Revenue this week to voice concerns about testing and accreditiation of the agency’s Payroll Standard.

The issue is growing in intensity, explained BASDA chief executive Dennis Keeling, because a new Web gateway will open on 6 April for companies to file their 2004/05 PAYE year-end returns online. This will be compulsory for companies with more than 250 employees, while 50-250 employee companies will have to efile next year.

Cash incentives are also available for smaller firms who go online before their deadline of 2009/10.

As a result of the move to efiling, payroll sofware developers report a surge of enquiries about their products. Currently the Inland Revenue PAYE Online services website lists 40 “approved suppliers” for the 2004/05 PAYE year end. Up to 20 more developers may be going through the approval process.

The Revenue listing page states, “We are pleased to accept forms and returns sent using any of the third party products listed or the Inland Revenue Online Return & Forms – PAYE product.”

What it doesn’t explain is that there are two levels to the official approval system. Keeling explained that in addition to the full blown Inland Revenue Payroll Standard, there is also an approval process for online submission of P14s and P35s. Frustrated with the workings of the full accreditation standard testing process, many BASDA member firms have opted to merely achieve the online filing approval.

According to Keeling, “The payroll standard seems to be taking on an undocumented life of its own. The accreditation is taking place within the Revenue and it appears testers are looking for things that aren’t documented in the standard. Even though members have passed the standard, they are having to keep up to date with changes. A lot of developers have decided they’re not carrying on with it.”

Simon Parsons, head of payroll processing at Ceridian-Centrefile, a major player in the corporate market, said the payroll standard was designed to help small and medium-sized companies choose desktop software. It did not reflect some of the more sophisticated applications provided to employers with 250+ employees, who are required to start efiling this year.

“Big players don’t presently get on the list although their products are amongst the best available to meet industry needs,” Parsons said. “The Revenue think payroll is purely about tax and national insurance, but that is only a small part of it.”

But payroll developers including Sage, Pegasus and Keytime told sister site AccountingWEB they have not had problems with payroll accreditation.

“In terms of setting a standard, it’s a good thing, but its beginning to be less of a differentiator,” said Keytime’s Anthony Boggiano. “Sage and IRIS and all the major suppliers are keeping up with it. If Sage has it nailed, that doesn’t leave much room for anyone else.”

Keep an eye out for the special HRZone/ITZone payroll supplement that is going out to members of both online communities (24 February for HRZone members.)

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