Thu, 1 Sep 2011

Low staff morale among HMRC's biggest challenges

*Low staff morale among HMRC’s biggest challenges*HM Revenue & Customs must face an inquiry, a senior MP has said, following the publication of a report by the Commons Treasury Select Committee, which raised serious concerns over low employee morale at HMRC. Ian Liddell-Grainger, chair
of the All Party Parliamentary Group on Taxation, said: ‘I urge the Select Committee chair [Andrew Tyrie MP] to give this six months and then carry out a short inquiry… and then continue with rolling short bursts of “where have we got to updates”.’

The Conservative MP for Bridgwater, Minehead and Exmoor criticised the organisation’s failure to improve staff morale, despite senior management being aware of the problem and making efforts to improve low-level engagement. The report said there was ‘little evidence of any positive impact to date’. Saying HMRC is ‘woefully behind on so many of its projects’, Liddell-Grainger said the government department was ‘rather like an alcoholic – they need to accept there is a problem before they can do something about it’.

The report did find, however, that HMRC had been operating under significant pressures while implementing complex legislation, but the
committee was concerned that ‘performance may deteriorate further if resource reductions are badly managed’. A spokesperson for HMRC said: ‘Staff morale is one of the biggest challenges facing the department. The changes we needed to make to streamline the department and deliver better services have inevitably had an impact on staff. We aredetermined to address this and have instigated a range of measures to deliver better staff engagement.’

Government departments fail to plan for delay
HM Revenue & Customs and the Department for Work and Pensions (DWP) have not made contingency plans for a
delayed delivery of Real-Time Information (RTI), in spite of ministerial recommendations.

Both departments say theyare on track to activate RTI from April 2013, despite conclusions in a House of Commons Treasury Committee report that described the project as following an ‘ambitious timescale’ and noting the ‘history of large IT projects subject to policydriven timescales [that have] been littered with failure’. The report, which reviewed the administration and effectiveness of HMRC, also recommended RTI be subject
to quarterly external audits by the National Audit Office (NAO). An HMRC spokesman said the department was on schedule. ‘HMRC is working up detailed plans for the pilot to enable thorough testing and resolution of any issues prior to the roll out of RTI reporting,’ he said. ‘This will highlight what, if any, contingency is needed.’

A DWP spokeswoman said the Universal Credit welfare programme, which will operate via RTI and is intended to reduce benefits fraud and error, would also meet deadlines. ‘The scale of IT development is similar to what we used for Employment and Support Allowance and that was successfully delivered on time,’ she said. HMRC is also working on resolving a backlog of open cases and stabilising the National Insurance and PAYE system, which added to the committee’s concerns. An NAO spokesman said the department had not decided whether to take on the responsibilities around RTI
auditing. He said: ‘No decision has been made, but it is under consideration.’

HMRC resource reductions a source of contention

Payroll professionals facing administrative burdens as a result of resource reduction at HM Revenue & Customs have been urged to share experiences with the House of Commons Treasury Committee at treascom@parliament.uk. The committee’s report into administration at the Revenue said too little was known about cost displacements from HMRC to the economy, and it asked bodies to provide quantitative evidence, without which the government would not address the issue.

Matt Boyle, campaigner at Research for PAYE, said HMRC had performed ineffectively in recent years with current staff levels. ‘The possibility that HMRC can improve its situation by a reduction in staff numbers would not appear to fully understand the present situation,’ he said.

Sage takes part in RTI pilot scheme

Sage has confirmed it is working with HM Revenue & Customs on the pilot for Real-Time Information (RTI). The software provider received confirmation from the Revenue about the project last month and has begun development work ahead of starting live pilot submissions with eight of its customers from April next year.

RTI will be mandatory for large employers from April 2013, with all employers phased in by October. It will require payroll submissions to be made to HMRC when or before payments are made rather than at year-end. Lisa Allen, business analyst for HR and payroll at Sage, said: ‘We have a technical specification and project plan from HMRC, and are due to meet with the Revenue in the next few weeks to discuss the details. Further workshops will take place in the autumn.’

Inclusion in the pilot is voluntary and involves Sage’s R&D department, which will carry out analysis, develop new functionality and perform tests. Its customer services teams will also prepare support services. Allen said: ‘As soon as we heard about the pilot scheme we applied to take part and are happy to be accepted so we can work closely with HMRC to provide our customers with a smooth transition.’ HMRC confirmed it will not publish a full list of payroll providers working on the pilot.

Celebrating payroll week

The Chartered Institute of Payroll Professionals (CIPP) has seen unprecedented interest in this month’s National Payroll Week 2011 promotional materials. UK payroll professionals have been encouraged to organise events from 5-9 September to raise awareness of the profession. Last year, payroll teams marked the occasion by holding ‘payroll surgeries’,where they invited colleagues to question them about the profession, as well as celebrations including payroll-themed quizzes and treasure hunts.

This year, the CIPP expects the event to be the biggest so far. Vickie Moss, CIPP’s associate director of marketing and business development, said: ‘This year is our biggest National Payroll Week to date – the CIPP has run out of promotional packs and mugs.’ Send your National Payroll Week 2011 photos to editorial@payrollworld.com

Ghost plumbers face HMRC fines

Some 600 plumbers face a civil investigation after they failed to pay the correct amount of tax, and a further five have been arrested following a nationwide initiative, HMRC announced. The ‘ghost’ plumbers were arrested following an investigation by HMRC into plumbers who owe VAT but failed to come forward and declare it, despite being given the opportunity to pay up in an initiative known as the Plumbers Tax Safe Plan. Some of those arrested owe up to £150,000, HMRC revealed, following months of investigations.

John Pointing, assistant director of HMRC criminal investigations, said: ‘We provided a chance for those we have arrested, and the 600 we are investigating, to come forward and put things right… HMRC will take action against those who chose not to pay the tax they owe.’

HMRC decision to charge VAT on salary sacrifice comes under fire

HM Revenue & Customs’ decision to charge VAT on salary sacrifice items has been slammed by the Chartered Institute of Payroll Professionals (CIPP) and the Forum of Private Business (FPB).Last month, HMRC announced that from 1 January 2012, employers will be required to pay VAT on remuneration paid in the form of goods or services rather than as salary, such as face-value vouchers and cycle-to-work schemes.

Karen Thomson, associate director of policy, research, and strategic visibility at the CIPP, said the announcement was unexpected. ‘It came as a surprise – the CIPP is disappointed that once again it appears to be another taxation in the UK to ensure that small businesses are given every opportunity to drive growth and job creation, not unfairly targeted and given ever-more hoops to jump through.’ Thomson advised payroll managers to review their existing schemes where VAT is chargeable on sacrificed items. ‘Where software is used for flexible benefits incorporating salary sacrifice, employers will need to speak to their software provider or in-house designers to ensure they are compliant.’

Data improvements set to precede RTI

Data improvement pilots will be held with employers from next month as part of HM Revenue & Customs’ commitment to improve data quality ahead of Real-Time Information (RTI) implementation. As part of the Revenue’s Data Improvement Project (DIP), the pilots seek to identify causes for ‘unclean’ data received and held by the Revenue, brought to light in 2010 when the activation of the National Insurance & PAYE Service (NPS), and subsequent reconciliation of taxpayers’ details, revealed six million had over or underpaid HMRC.

Created to address issues that could impact RTI, the DIP is currently in consultation with an employer group and intends to compare employers’ payroll records with HMRC data for accuracy. An HMRC spokesman said: ‘We plan for customer relationship managers to work in partnership with the largest employers to prepare for RTI and align HMRC’s records with theirs. ‘HMRC is conscious of the need to keep burdens to a minimum and we will automate the alignment process as far as we can.’ The DIP aims to match data with 99% accuracy at the first time of asking, and without human intervention. In its July report on the administration of HMRC, the House of Commons Treasury Committee said: ‘The success of both the NPS and RTI will depend, to a large extent, on how effectively HMRC can “cleanse” the data it receives and holds.’

Plymouth teachers hit by pay blunder

A data input error at Plymouth City Council payroll resulted in some 1,800 teachers not receiving their pay on time at the start of the summer holidays in July. The council has confirmed that an incorrect date in the BACS transfer caused a delay of three days to teachers’ monthly pay, leaving many without enough funds to cover direct debits and pre-arranged payments.

Teachers were notified of the mistake after it had occurred and were offered compensation for any bank charges incurred as a result of the late payment, as well as emergency funds if needed. The National Association of Schoolmasters/Union of Women Teachers (NASUWT) received complaints from members, many of whom were on holiday when
the error occurred. Fiona Westwood, South West Regional Organiser for NASUWT, said: ‘It was a fundamental issue. For our members it was very difficult because they finished work around 21 July and many went on holiday the following day.’

Westwood said members were frustrated by the amount of time it took the council to amend the issue. ‘It seemed to take longer to resolve than one might expect. If you can cause an error by not pushing a button, why can’t you fix it by pushing a button?’

A spokeswoman for Plymouth City Council admitted the mistake was caused by a member of its payroll team. ‘The delay in teachers receiving their pay in July was due to a date input error for the BACS transfer,’ she said. ‘This was a result of individual error in the control team, which should not have happened. An internal audit has taken place following the error, which has reported Plymouth as having strong payroll controls in place.’

Scotland yet to confirm shared services project

The creation of the UK’s largest shared services centre proposed by seven Scottish local authorities will not be confirmed until the end of September, despite publishing a detailed business plan last month. Seven Clyde Valley councils announced proposals for a shared services partnership to merge their payroll, finance, revenues and benefits, HR and IT support services in August, which is expected to save up to £30m a year in five years’ time, rising to £34m after 10 years.

But a spokesman at East Renfrewshire Council confirmed the whole project could be scrapped if the councils involved do not support the idea. ‘It could be that every council says “no”, or “absolutely, we’re in”. Or it could be a combination. But there is no information at this stage about who is in and who is out,’ he said. ‘After September, if there is a move for a new body, we will get the management team in place by the end of the year.’ Glasgow, Renfrewshire, East Dunbartonshire, East Renfrewshire, Inverclyde, West Dunbartonshire and North Lanarkshire councils are all involved in the proposals.

*HMRC backs greater tax transparency *

HM Revenue & Customs will hold a consultation this autumn into supporting greater tax transparency for individuals. It hopes to discover how the administration of the personal tax system can become more transparent for taxpayers. As part of the project, HMRC will develop a new online calculator and downloadable applications by April 2012 that enable people to calculate their annual tax rate, National Insurance Contributions and specific calculations, such as whether an individual is better off receiving childcare vouchers from an employer or claiming
the childcare element of the working tax credit.

Flexible leave under scrutiny

Employer representatives have voiced support for the government’s proposals to introduce flexible parental leave, while raising concerns about extra administrative and financial burdens that may result for employers. Responses to the Department for Business Innovation and Skills’ Modern Workplace Consultation published last month were largely sympathetic to the idea of introducing 34 weeks of shared leave between mothers and fathers, but warned it risked damaging business. The Institute of Directors (IoD) said the proposals showed an increasingly regulatory approach from the government.

Alexander Ehmann, the IoD’s head of regulation, said: ‘In principle, we support shared parental leave… Unfortunately, the government is implementing these proposals in a way that will add to the complexity and cost of managing workforces.’ EEF, the manufacturers’
organisation, called for the proposals to be reformed, saying they would be a significant burden, particularly on smaller employers, arguing that manufacturers already promote flexibility. Tim Thomas, EEF head of employment affairs, said: ‘Flexible working is widespread in manufacturing given the need to respond rapidly to changes in markets and customer needs, as well as employees’ desire for greater flexibility.’ The Chartered Institute of Personnel and Development, however, said flexibility should extend beyond parents and carers.

Mike Emmott, employee relations adviser at the CIPD, said: ‘Restricting it to groups of parents and carers creates a mistaken assumption that flexibility is good for some but not others.’

Ipsa compliance chief resigns in midst of MP investigations

The Independent Parliamentary Standards Authority (IPSA) was dealt a fresh blow when its senior compliance officer, Luke March, resigned a week after refusing to name those MPs whose expenses have been, or are being, investigated. In an interview with the Press Association, March said it would be unfair to reveal the identities of MPs who had been investigated but were found to have done nothing wrong.

However, those who had been found guilty of foul play would be identified following an investigation. Ian Kennedy, IPSA chair, told MPs earlier this year that preliminary investigations had been launched into the expenses of 40 MPs since the General Election. It had been assumed their details would be published. March said he had been concerned by a ‘lack of proportionality’, claiming the system does not make any distinction between major problems and trivial mistakes. A spokesman for IPSA told Payroll World: ‘There is a separation between the role of IPSA and that of the compliance officer, which was established as an independent section that people do not understand.

IPSA is in place to set rules for MPs and the compliance officer’s role is to look into claims where MPs have been accused of playing the system. IPSA would therefore not take a view on whether MPs should be named while under investigation.’ Flexible leave under scrutiny

And finally…

Taxpayers facing a payment due date at the end of July received a deadline extension last month, after HM Revenue & Customs ran out of paper on which to print reminders. Officials said stationary was in short supply after an unexpecte rise in the number of paper self-assessment tax statements issued this year. Worryingly, HMRC was put in charge of overall government stationary procurement a week later.

See also:

• HMRC reviews unfair practice of letting P35 late penalties build up before issuing them
• HMRC says RTI will cost employers more than it first predicted
• Payroll World and Sage undertaking definitive RTI and auto-enrolment survey