The Inland Revenue have produced a 'quality standards' list of software suppliers that meet the new e-filing requirements - but there seem to be quite a few big names that have been left off - does anyone know why this is? I'm in the process of selecting a new provider and can't decide whether to stick to the list or not.
Ralph B
Related resources
Replies (3)
Please login or register to join the discussion.
The reason that "quite a few big names have been left off" the Inland Revenue's Quality Standards list depends on who you ask!
If you ask the suppliers, they will often say that they are too big to worry about accreditation.
If you ask the IR, they will (unofficially) say it's because those suppliers can't meet their standards. Officially they will give you the true but unhelpful answer that those suppliers have either not attempted or not completed the accreditation process.
The reality depends on you understanding what these terms mean:
- the Quality Standard is a specification by the IR of statutory calculations (mostly gross-to-net but including SxP entitlements etc), and for generating acceptable e-filing returns
- it does NOT specify anything to do with data entry or the build-to-gross process, or indeed any returns/reports required by other bodies (e.g. pension schemes, court orders, etc)
- in order to be accredited by the IR (i.e. appear on their list), a supplier has to go through rigorous testing (off- and on-site) that can take several months - and has to repeat this each year
So, in summary, the IR are (not surprisingly) only concerned that the returns sent to them contain correctly calculated amounts and are in an acceptable format. They are perfectly happy if these objectives are met through a payroll that is not accredited.
On average, a payroll department spends 80+% of its time on other activities (such as collecting & validating data), generating returns for other bodies and - of course - dealing with employee and management queries.
So the right payroll for you will primarily support those activities and reduce the time & effort spent on them. Of course it must meet the IR's objectives, and an accredited system is most likely (but not guaranteed) to do this.
Ultimately, the decision is yours. A supplier on the list is a safer bet (but not mandatory) - and, as always, you should choose one who can best meet your other needs.
Firstly, the Inland Revenue do not have a list of software products that meets the "Quality Standard".
They do list software packages written for small employers (generally using a PC or the Internet) that meet the "Inland Revenue Payroll Standard".
Many proficient payroll services will meet the Quality Standard but not fully meet the requirements of the IR payroll standard for a number of reasons, as some of the compulsory elements don't apply (for example Local Government don't have directors, Pension payroll don't have NICs).
The IR Payroll Standard also requires the payroll service to Pay over tax and NICs to the IR and undertake the P35 electronically. Most employers pay over these amounts electronically through their own finance systems, and the P35 declaration contains elements not found in the actual payroll and is completed by the employer. So again, elements of the IR Payroll Standard do not fit the major providers.
Do the major providers comply with the requirements for correct Tax and NICs calculations etc., of course they do.
The Inland Revenue provides a list of products and services that do meet the EDI software recognition standard (which consequently meet Quality Standard for Tax Year End delivery).
This can be found at:
http://www.inlandrevenue.gov.uk/ebu/edi/edi-software.htm
Most of the major suppliers do appear on this list.
P.Simon Parsons M.Sc FIPPMDip
Chair, Inland Revenue Electronic Exchange Network
Head fo Payroll Processing & Legislation, Ceridian Centrefile
Simon is correct, but this is not the full story.
If you follow his suggested link, you will find the following statement from the IR:
"Electronic Data Interchange (EDI) allows a secure electronic exchange of PAYE information between employers and ourselves. The Electronic Data Interchange (EDI) Recognition Scheme tests software products that support an EDI interface with us. The products that are currently recognised are listed below under 'EDI enabled payroll products'.
The Inland Revenue has tested the ability of the commercial products listed to file forms and returns using EDI but has not tested any of its other features."
The IR also runs the Payroll Standard Accreditation Scheme and tests software products against it - awarding accreditation for one year at a time to those that succeed.
So the Electronic Data Interchange (EDI) Recognition Scheme only refers to the ability to submit/receive specific files via EDI. Whereas the Payroll Standard Accreditation Scheme actually checks the ability of payroll software to perform correct calculations, as well as submitting/receiving all statutory returns (via EDI and/or the Internet).
This is obviously a much tougher and laborious series of tests, and yet nearly 40 suppliers have already achieved it.
The original question is therefore still valid unless, as Simon indicates, you only want a payroll service and are not interested in the software itself (i.e. for running in-house).
My original answer is also still valid, in that the scheme only covers those aspects of interest to the IR. It is up to each organisation to determine the importance of the other aspects, when selecting a new system.
If anyone wants any further information, I can be contacted on [email protected]