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Software providers expect PAYE problems

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A software industry group has warned that the system used by employers to send PAYE returns to the Inland Revenue via the internet has not been properly tested and “will not be able to cope with demand”, according to a report in Computer Weekly.

The report said: “Although suppliers of payroll software have been able to send test transactions through an electronic testing system run by the Revenue, they have not been able to send dummy transactions through the Government Gateway – a portal that gives access to online government services.”

Dennis Keeling, chief executive of the Business Application Software Developers Association, told Computer Weekly that three-quarters of BASDA members said the test service provided by the Revenue was “not a rigorous test to prepare for a live tax filing service.”

Keeling said: “We have warned the Revenue that the Gateway will not be able to handle the demand for online PAYE returns. We believe that there will be major problems. Companies leave filing to the last minute to make sure they do not make any mistakes.”

A spokesman for the Inland Revenue was quoted as saying: “‘We have a comprehensive testing plan for our online filing [internet and Electronic Data Interchange] channels, as well as for the IT which will support the new regime for employers. We have been working with software suppliers to help them make sure that their products meet the needs of that new regime.”

Online filing is “secure, convenient and quick”, the Revenue says in a series of FAQs on its online services pages.

It adds: “It is more reliable and efficient than using paper, and can cut down on storage space, post and administration. And, because information mostly passes between computers without manual intervention, there is less chance of it being misinterpreted, or of mistakes being made.”

Last week the Revenue reported that a “whopping” 500,000 employers had registered to use its online services for 2004/05.

But some in the payroll software industry are concerned that the Revenue’s systems may not be able to cope with the volume of information, particularly in the approach to the filing deadline.

Philip Whiteley wrote in the March edition of Payroll World: “There is trouble ahead. For end of year, there is a smaller window and a higher capacity requirement per transmission than is the case for self-assessment. P14 and P35 forms take up much more capacity.

“There are likely to be tens of thousands filing end-of-year documents online, but employers with fewer than 50 staff are incentivised to convert early, and there are an estimated 1.6m of them. Moreover, some of the 11,000 large employers (with more than 250 staff), that have to send electronically from this year-end, have huge numbers of P14s.”

Last Friday, the Revenue announced regulations to counter artificial arrangements designed to exploit PAYE online filing incentives.

Writing today in TaxZone, tax consultant Simon Sweetman said: “I know that shortly after this was announced there were accountancy firms saying register for PAYE even if you don’t have any employees to collect the money. I think this is a classic case of abuse of something that was intended to be helpful.”

Andrew Goodall
Editor, TaxZone

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Annie Hayes

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