In today’s digital age, the importance of data quality cannot be overplayed, particularly for governmental agencies such as HM Revenue & Customs (HMRC).
As HMRC increasingly relies on Real-Time Information (RTI) from employers to streamline tax collection and benefits distribution, the accuracy, completeness, and reliability of this data is essential.
High-quality data ensures efficient operations, reduces errors, and enhances the overall effectiveness of the tax system. Where this is lacking, avoidable problems are created for employers, employees and HMRC alike.
RTI and inaccurate data: the main culprits
HMRC receives real-time information from employers, each payday, and matches this to information that it already holds about an individual.
If there are misnomers or gaps in the data supplied via RTI, the process of matching becomes far less efficient.
The majority of errors can be attributed to National Insurance Numbers, full names and dates of birth.
Each year, HMRC receive thousands of incorrect returns; this includes returns where the NI number is given as AB123456, and returns where the individual was aged over 100 but in employment, or receiving a pension.
Whilst these might seem like impossible mistakes to make, thousands of employers are submitting incomplete and inaccurate data every month.
The impact of inaccurate RTI data on employers, employees and HMRC
As an employer, the overarching consequence of supplying poor quality data, whether about new starters or long-standing staff, is likely to be that you will see an increase in contact with both your employees, and HMRC.
Errors in RTI data could, for example, result in your employees being taxed incorrectly (and higher volumes of tax code update rejections for you), and therefore underpaying or overpaying in the year.
Beyond this, their entitlement to certain benefits could also be significantly impacted if incorrect or incomplete data is provided to HMRC.
These are things that are likely to spark concern for your employees and they are going to be looking to you to provide answers.
HMRC, on the other hand, are going to want to try and fill in the gaps or rectify errors, to avoid unnecessary duplicate records, and so will need to be in touch with you in order to do so.
How to get RTI right as an employer
When it comes to getting it right, it really is a case of employing a little common sense, and double checking that your input is correct and properly formatted prior to submission.
Official documentation can be great for cross-referencing to make sure this matches up to whatever information you are supplying to HMRC.
Outsourcing your payroll function may also be something to consider, if you are concerned about managing the provision of accurate and complete data to HMRC.
GH Payscheme: outsourced payroll support
We can eliminate your concerns about complex and time-consuming payroll processes – such as managing RTI reporting– as well as help you to navigate your wider obligations as an employer.
We can ensure that the data you are reporting via RTI is complete, accurate and reliable, avoiding problems for you and your employees and, simultaneously, keeping HMRC happy.
To discuss your requirements with a member of our specialist payroll team, contact us today.
