25 May 2022
We’re delighted to present an interview with Pauline Green ACIPP MBCS FMAAT, head of compliance and programs, at Intuit QuickBooks, in which we discuss what BASDA does, and the challenges currently faced by software developers
Pauline has been involved with the Business Application Software Developers Association (BASDA) for nearly ten years. She held the position of vice chair of the payroll, human resources (HR) and pension special interest group (SIG), until her appointment as chair in May 2018. Through this role, she was involved with the Pension BIB (BIB being software organisations BASDA, Ireen and BCS), and helped develop the PAPDIS Standard.
While her current role is payroll, HR and pension focussed, she’s previously worked in various industries as an accountant. For this reason, she’s interested in Her Majesty’s Revenue and Customs’ (HMRC’s) plans for application programming interfaces, including its making tax digital plans. BASDA has a unique role in representing the voice of industry, particularly with HMRC.
Q: Who are BASDA?
A: BASDA is an association representing software with UK government, policymakers and industry media. It’s a not-for-profit organisation. Members’ solutions service the majority of core business functions such as finance, payroll / HR, operations and development.
Q: What does your role as the chair of BASDA’s payroll, pension and HR SIG involve?
A: I’ve been involved with the payroll, pension and HR SIG for nearly ten years. Initially, as vice chair (for four years) and then as the chair for the last six years. During this period, I’ve been involved in several projects and represented BASDA at various HMRC stakeholder groups.
One of the major projects was, of course, PAPDIS. This project developed a data standard to take pension data from payroll to pension providers. This was a great example of how BASDA works with other software developers, as well as other stakeholders. The CIPP is also a key member of this.
One of the key HMRC stakeholder groups I represent BASDA on is the employment and payroll group (EPG), which the CIPP is also actively involved in. My role is to ensure that all BASDA members’ voices are heard in these meetings.
Q: What are your views on the mid-year change to the primary threshold (PT) for National Insurance contributions (NICs)? Could it have been implemented more quickly, or does the 6 July date feel appropriate?
A: When I consider the mid-year change to the primary threshold for NI with my BASDA hat on, I can understand why the government chose to implement it on 6 July. When the announcement was made, it was clear that some software would need longer. While a lot of our members could have made an earlier implementation date, we must be aware that not all software is in the cloud. Don’t forget HMRC also has to update its BASIC tools software, while also getting the ‘back end’ updated to support any changes. I believe the government considered all this when they made the decision.
Desktop or on-premises software require longer lead times to make changes. Typically, a desktop solution not only has to make the changes but also must do regression testing. Regression testing alone can take two to three weeks. The update then needs to be delivered to HMRC’s customers. Some of these updates still involve a customer using a disc! The software developer must also ensure all their customers have updated to the latest software.
The spring budget was on 23 March 2022, which was only 11 working days before the start of the tax year. However, we should also consider that if there was a Bacs payment involved on 6 April (which may happen for weekly / fortnightly / four-weekly pay frequencies), then the payroll would have had to be processed, at the latest, on 31 March. This would have given barely a week to turnaround the information.
In addition, the exceptionally large payroll employers will need to do extra testing themselves. We must consider that payroll software has become bespoke for some employers. This would require additional work and / or engineers to be on site to make the changes.
Q: What processes would you like to see implemented to balance the need for timely action but also to allow sufficient time for development and testing? (E.g., the coronavirus job retention scheme (CJRS) was huge with no turnaround time, whereas the new PT seems like a much smaller job, with a much longer turnaround time.)
A: In the past, there’s been an unofficial agreement between software developers and government that any significant change would require around 18 months’ worth of consultation and development. This hasn’t been the case over the last few years, primarily, but not solely, due to the outbreak of the Covid pandemic.
In answer to your specific question around the difference in the CJRS implementation and the PT implementation, the major difference here is that the PT implementation is applicable to everyone, to every single payroll, and is required for the calculation of NICs.
With the implementation of the CJRS, not all software included the actual calculation of CJRS values. Most payroll software allowed a payment category to be implemented, or already had the ability for employers to add their own bespoke pay category, which could identify a CJRS payment. Indeed, the burden of CJRS was upon payroll and accountant professionals. These professionals predominantly used other methods (e.g., Excel) to calculate the CJRS payments, and made the claims on behalf of clients using this information.
Q: What have been your biggest challenges over the last few years, and what changes have you made to resource and processes as a result?
A: The biggest challenges have centred on the late notification of upcoming changes. In the past, the budget was announced in November / December, allowing sufficient time to implement and fully test payroll software before the start of the new tax year, without any further changes.
The budget changes are implemented even though the actual legislation may not pass through government until the beginning of the new tax year. This ‘on faith’ implementation is that the legislation will follow. To be honest, it’s only occurred once, when the Scottish government made a change after its initial budget. This was because it required the Green Party’s support, who had asked for a change as a condition of supporting the legislation.
The other additional challenges have related to the devolved governments having their own agenda and timeframes. Indeed, the Welsh and Scottish assembly’s budgets are usually after the UK, so they’re aware of the values they’ll receive from the UK government.
It’s not just budgets related to tax rates and thresholds that impact payroll software, and some examples of other recent challenges include:
court orders – recently, the Welsh government made changes to council tax from April 2022, which wasn’t widely publicised and was very last minute
Northern Ireland didn’t implement the introduction for statutory parental bereavement pay at the same time as the rest of the UK – again this isn’t always widely known.
BASDA, as an organisation, works closely with HMRC to ensure there’s understanding of the processes involved to update software. However, as we know, HMRC isn’t responsible for budgets. It’s under HM Treasury and developed governments, so we must rely on HMRC’s relationship with HM Treasury and others to act on behalf of software developers.
Q: Could you describe the standard processes and timescales around year end please?
A: As I’ve outlined above, in general, the tax year changes take three to four months to implement. Of course, we’re aware of tax table changes, meaning there are changes to rates and thresholds: however, tax year end doesn’t just involve tax table updates.
For example, this year we’ve had the new NI letters to support freeports and veterans. There are also changes to the real time information submissions each year, which must be made and tested. Again, each software developer will have a slightly different process and requirements to implement and test. Desktop and on-site premise software will require a longer period for implementing the changes and regression testing.
Some software developers may have different versions of the same software and need to ensure all the versions are updated correctly. As mentioned above, there may also be bespoke software for some customers as well.
Beyond the software being updated, as a developer, there are other considerations, including ensuring customers are aware of the upcoming changes, plus internal teams, such as sales, marketing and customer support teams.
Q: Do you have any tips on how to stay up-to-date with the constant changes we see in the payroll industry?
A: Personally, I use multiple sources to keep on top of the changes. Obviously, the CIPP is one source. In addition, the regular interactions I have with HMRC, either directly via BASDA or indirectly via the EPG etc., provide me with an insight on future and upcoming changes.
Particularly, the EPG meetings enable cross-functional representations, allowing BASDA and other software developers to share any thoughts, concerns or questions. It’s during these meetings I become very aware that I’m representing software developers on behalf of BASDA, and not just myself. n
About BASDA
BASDA represents UK business software and is the only industry organisation focussed on supporting the issues that business software development organisations face. As a not-for-profit trade body, we ensure our members’ voice is heard by some of the highest levels within UK government and policy makers, as well as industry media. Our members’ software solutions cover most core business functions, such as operations, development, finance, marketing and HR, whether deployed as cloud, on-premise or hybrid applications.
How we help our members
We collaborate with our members through our SIGs, working parties and networking events so that knowledge is shared, and their views are heard. Our wealth of experience in dealing with the UK government and policy makers, including HMRC enables us to engage with them on issues that affect our members. Experts from our SIGs and working parties provide advice to the government on the best ways to ensure the successful rollout of policy initiatives which have an IT impact. In addition, we also develop industry standards and charters which allow best practices to be rolled out across our membership, as well as industry wide.
For further information on BASDA, check out: www.basda.org
Featured in the June 2022 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.