HMRC Data Collection
On the 20th of July 2022, HMRC released a consultation document titled ‘Improving the data HMRC collects from its customers. The responses to this consultation are due to be released later this year.
The full consultation document is available at:
The consultation covers six areas where HMRC state that collecting additional data could bring significant benefits, although these additional pieces of data appear to favour the government rather than the individual or business who will be obliged to complete extra boxes on their tax returns. If the additional boxes are not completed penalties will apply for inaccurate returns.
In the main, the extra data is not required for HMRC’s prime function of collecting tax, but it will be used for policy making by HM Treasury and other government departments.?
So, in readiness for what these additional data requirements may mean to an employer or employee, let us take a look at those which will directly affect the employer.
HMRC does not currently collect any data on employee occupations. The Annual Survey of Hours and Earnings (ASHE) by the Office for National Statistics (ONS), and the once-per-decade National Census, both ask for job title information and a brief description, but this data is apparently either too small or infrequent to be useful to the government.?
HMRC says that in order to identify occupation-specific skills shortages in different areas of the country and to help employers understand what skills and training they need for their employee’s; it needs to collect information on the occupation of each and every worker.?
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The proposals are to include a new field on the Full Payment Submission (FPS) which will enable the employer to enter the relevant standard occupational classification (SOC) code when the employee joins, leaves, or changes occupation. Considering the fact that many payroll software systems may not hold an employee’s occupation, this could be a new piece of data that payroll will be required to obtain. A direct link from your HR systems may solve this issue.
HMRC holds an address for every business, but this may only be a postal address. It may not know how many locations the business operates from. HMRC says that in order to identify compliance risks, such as operating overseas, and to match business rates compliance, it needs to know where the real business activity is.?
The proposals are to include two compulsory address lines for each employee on RTI forms to report the normal base/office for each employee and in addition, add a new field for employees where there is no standard work address for the employee. For example, agency workers, contractors, or other itinerant workers.
The employer’s FPS already records bands of hours worked for each employee, this was required for working tax credit claims. Where pay varies according to hours worked, the additional hours worked must be shown on payslips, but where pay is not variable according to hours worked, payslip data is not required.
HMRC state that it cannot identify employees who are on zero-hours contracts, and it needs more working hours data to spot when the national minimum wage (NMW) rates have not been complied with.?
The proposals are to replace the worked hours bands on the FPS return with contractual hours for each employee, and /or?to split out “other” bands on the RTI return to give reasons for why the pay is irregular.
If these proposals become part of legislation these changes will potentially affect all employers, how any additional data may be stored and shared, as well as tax agents and not least your payroll software provider.