HMRC is making software changes as part of ongoing plans to ensure its systems are up to date, but as long as pension administrators making pay-as-you-earn or pension scheme returns are prepared, they should not be too concerned, experts have said.
Currently, electronic PAYE returns have to be made via the Electronic Data Interchange, which was introduced in 1998. However, HMRC has confirmed this channel will be decommissioned in April 2018. Instead, all electronic pay returns will be made via the more modern XML channel.
Annuity and pension administrators don’t need to panic, but they will need to start planning now
Ben Cocks, Altus Business Systems
“We are decommissioning HMRC’s Electronic Data Interchange and updating the platform, as part of our ongoing plans to ensure our systems remain fit for purpose,” said an HMRC spokesperson.
According to HMRC, “nothing is changing immediately for users of EDI, but we’re putting a dedicated team in place to fully support them through the migration process”.
Similarly, the current version of Government Gateway, which is used by businesses to prove their identity to access government services, will be replaced in March 2018.
“Given its strategic importance, government stakeholders are currently reviewing how best to administer it in the future,” said the spokesperson.
“These discussions are ongoing. HMRC customers that use Government Gateway will continue to do so,” the spokesperson added.
Pension administrators don’t need to panic
Ben Cocks, founding director of technology provider Altus Business Systems, said “annuity and pension administrators don’t need to panic, but they will need to start planning now”.
“At a high level the information exchanged is similar to the current flows, but the technology and the data exchange sequences with HMRC are very different; it is not simply a data formatting challenge,” said Cocks.
He said administrators may choose to develop new software themselves, or, more likely, will use a third-party service provider to handle the XML channel in the same way many of them used external service providers to support EDI.
Cocks added: “While the deadline is 18 months away, many administrators will almost certainly decide to switch to the XML channel well before then to avoid a drop-dead date with no contingency.”
Smooth transitions
Malcolm Johnson, managing director at pension software provider Profund, said the industry is well used to HMRC making changes. “The one interesting point about this particular change is it’s quite well advertised and quite well known, so it’s not catching anyone unawares. There’s plenty of time for planning.”
Johnson said it is important for users of EDI to make sure that they “transition smoothly, in plenty of time”.
“People should be well prepared, if they haven’t already moved over [to XML],” he added.
Martin James, pensioner payroll technical lead at Profund, said the more modern XML channel enables files to be sent directly over the internet to HMRC, free of charge. With EDI, “you needed to have another piece of software to send the files to HMRC, which is a cost”.
This additional piece of ‘middleware’ software will no longer be needed, so moving to the more modern way of sending files to HMRC will simplify the operational process, said Johnson.
Ian Neale, director at intelligence provider Aries Insight, said the changes are not necessarily going to be welcome to pensions administrators.
“The last thing we want at this stage in the industry is more massive disruption. The industry is pleading for a period of stability and no change,” he said.
