01 June 2024

Cybill Watkins MCIPP, group product legislation manager, Zellis and Ben Dudley, deputy director of customer services, HM Revenue and Customs (HMRC) look at the key areas which cause issues with real time information (RTI) data received by HMRC


As we all know, getting data right is our number one priority in payroll. But how often do we focus only on ensuring the numerical data is correct? Yes, this is imperative, but have you also considered the importance of the employee’s own data? If the data we use is incorrect and needs changing, will HMRC pick this up, or is it the employee’s responsibility to get it sorted?

HMRC looks at various fields to match the record from your system to the record it holds, but if we don’t use the right data or if we add ‘temporary’ / incorrect data, it’s very easy for a mismatch or no match to happen.

In this article, we’ll look at three key areas which can cause an issue from the other side of the RTI fence, and how we can play a part in solving them.

 

Why is data quality important?

Reflecting on the importance of data quality for employees, payroll professionals and ultimately HMRC, Ben said, “Getting this right helps to make sure employees are paid correctly – including paying the right tax and National Insurance contributions (NICs), which protects their entitlement to state benefits and the state pension.”

 

National Insurance numbers (NINOs)

NINOs are the most obvious piece of data to talk about as HMRC had over 700,000 records it couldn’t match to an individual NINO in 2022/23.

NINOs stay with an individual for life. However, from an RTI perspective, it’s worth noting that this isn’t a mandatory field. You may ask why. Well, you may not have this information, the employee may be under 16 or they may have only recently moved to the UK to work, and so have only just applied to the Department for Work and Pensions (DWP) for a number. It’s also possible that the new employee may just not remember it.

While using a NINO for a new employee isn’t mandatory, Ben shared this key warning, “Don’t submit a default or incorrect number as it will delay the
right pay.”

Most software has just one NINO field, and this is the field the software will take for data line five on your RTI submission.

You may also wish to consider your process for recording a temporary NINO from the pension provider (as many will generate a temporary number so you can successfully upload their reports into their system), as some employers may use the software and record this in the NINO field, not realising it will be fed through to HMRC on the RTI submission.

There’s also no way for HMRC’s side to check and reject the RTI submission if you have used an unknown combination such as AB123456C or AA010180F. However, temporary NINOs will automatically fail the RTI submission.

Ben highlighted the scale of this issue, by confirming, “Last year, HMRC received over 2,000 returns with the NINO AB123456 and over 1,000 returns with the NINO AA111111.”

It’s safe to say that this is due to payroll errors rather than a single employee with over a thousand jobs.

 

How can we get this right?

The most important thing to remember is that either the correct NINO is entered in the correct format, or that it’s left blank (for the shortest time possible while you find the individual’s actual number).

Ben shared some tips on how to make sure you have the correct NINO, stating, “If an employee doesn’t know their NINO, ask them to use the HMRC app to find it. They can log in for the first time by using photo identification or answering some questions. Once they have the app, they can view, print and even save their NINO in their phone’s wallet.”

The number can also be found on
the employee’s:

  • paper NINO notification letter (usually received before they turn 16)
  • NINO card (issued between 1975 and 2011)
  • documents from HMRC or DWP that include a NINO.

If you make a submission with a blank NINO, HMRC will generate a temporary reference number. Or it will create one when unable to match an individual submission to a NINO.

 

Date of birth

It may seem surprising that we’re discussing date of birth as a data field which causes errors, but HMRC statistics showed that last year, nearly 7,000 individuals aged under one-year-old were reported via RTI, either in employment or with a pension. There’s a very slim chance a one-year-old may inherit a pension, but this is an extreme rather than expected.

Explaining this anomaly, Ben said, “We think this issue occurs when payroll professionals use the employment start date instead of the date of birth. It really shows the importance of checking the data is correct, and in the correct data line.”

At the other end of the scale, 28,200 individuals aged over 100 and in employment or with a pension were reported. And while there’s a slightly greater chance of this being true than for a one-year-old, it would still be rare. The most common date of birth used was 01/01/1980.

This field is compulsory and sits on data line ten. It must also be reported on each RTI submission, or it will fail validation. What the validation cannot check is that you have entered the correct date. (Please note, the only time it will go through is if data line 147 has a Y in it, to signify payment to a non-individual where payments are made to a body, such as a personal representative, trustee or corporate organisation.)

 

How can we get this right?

The best way to avoid date of birth errors is to cross reference the information with the documents used for right to work checks, such as a passport.

You won’t necessarily know if it’s correct, but you can check any starter documents you have sight of and also ask them to complete and send you the new digital Starter Checklist before they start. You can access this here: https://ow.ly/JFQN50Rr0o1. In addition to providing the correct date of birth for your employee, Ben stressed, “It’s important to check the date is in the correct format – day, month and full year of birth. If you enter a default or incorrect date, it can mean your employee doesn’t get the right pay.”

It’s also important to check your software isn’t set up with a default date of birth.

 

Name

Like date of birth, we take it for granted that name data will be correct. Ben shared some of the more surprising entries HMRC has received:

  • 507 returns had A N Other
  • 128 as either Mr, Mrs or Ms Dummy
  • 572 whose surname ranged from X to XXXXXX
  • 824 with surnames of either ‘unknown’, ‘not known’ or ‘known’.

The obvious reason for this could be that these were test records set up in a live environment, or that the whole payroll was a test, but the RTI was submitted as live.

 

How can we get this right?

To avoid errors when recording names, enter the forename(s) and surname(s) in separate fields, enter double-barrelled names into one field and always validate spelling with official documents, while never using initials.

If you’re setting up a test record, ensure you don’t do this in a live environment. And if sending a test RTI file, ensure you have the test indicator ticked.

 

Take the time now to avoid ongoing issues in future

For payroll professionals, getting these three things right will avoid errors which can all too easily become time-consuming problems to resolve. This will help our employees too, getting them on the right pay sooner, preventing short-term financial hardship and removing the need for them to contact HMRC. n

 

This article featured in the June 2024 issue of Professional.