Scheme administrators face new burden as HMRC moves to compulsory pensions e-filing
1st Jul '07
Over four out of five pensions scheme administrators (80.7 per cent) showed ‘some’ or ‘significant’ concern about their readiness for mandatory e-filing, according to a recent survey commissioned by e-filing solution provider Altus, conducted by financial market research company Matrix-Data in the last month. VRX
From 16th October 2007, in just 12 weeks time, it will become compulsory for scheme administrators to file all quarterly Accounting for Tax Returns, annual Event Report Returns and annual Pension Scheme Returns electronically to Her Majesty’s Revenue & Customs
(HMRC).
The largest cause for concern seems to be HMRC’s own on-line web forms which are used by most respondents (80.4 per cent) to make their returns. The key concerns are validating that the returns they have submitted have been received intact and keeping accurate records
of returns for future reference.
Nearly two thirds (63.6 per cent) of those that have used the systems remarked that they had been unclear whether the submitted data had been accepted by HMRC. More than two thirds of pension scheme administrators (71.7 per cent) indicated marked concern about the
process of ‘reporting and correction of errors’ and half the audience (50 per cent) was also concerned about ‘validation of data and effective record keeping’ for their e-filing process.
These concerns are accentuated by the very real possibility of fines being imposed by HMRC if returns are late or incorrect, or records are not kept properly. More than one in three (37.4 per cent) went as far as to admit that if challenged by HMRC they are currently unsure if they could produce records to confirm the contents and successful submission of a specific return. This threat is all too real for some 12.2 per cent of respondents who have already been fined by HMRC. Perversely, many companies are resorting to paper to resolve this: more than 56 per cent are printing off web pages and filing them to cover themselves in case of an investigation.
The concerns are also based on real world experience of the web forms. Half (50.7 per cent) had already experienced a total failure when trying submit the completed return. Forty per cent had experienced loss of manually entered data even before final confirmation and four out of five (80.5 per cent) had attempted to access HMRC’s site only to find it unavailable or slow to respond.
More than a quarter (26 per cent) are spending between one and two hours to compile, validate, secure approval for, submit and update records for each and every return and over one in five (21.5 per cent) estimated that it was taking more than three hours per pension return submission.
These figures represent a worryingly significant administrative burden given the fact that a sizeable minority of TPAs (9.8 per cent) are processing over one thousand returns per year. Of these larger TPAs - the ‘power users’ of HMRC's web forms - all except one experienced
problems with the forms.
Such is the extent of the problem that more than one in five (23.1 per cent) of the TPAs that make more than 100 returns each year have already decided to automate the e-filing process by using the Altus Pensions Gateway (11.5 per cent) or by building their own bespoke automation solution (11.5 per cent).
Ben Cocks, product manager, Altus Limited, explains:
“Short-term there are clearly problems with the introduction of mandatory e-filing, most notably for TPAs handling hundreds or even thousands of submissions close to each return deadline. But there’s also an opportunity here for companies to automate the whole process to save on administrative effort and reduce the risk of falling foul of the regulations.”
Notes:
Altus Limited commissioned Matrix-Data to conduct a survey of 589 pensions scheme administrators including third party administrators, life assurers and individual company scheme administrators. The questionnaire was distributed via email on 20th June 2007 and responses were closed on 29th June 2007. A total of 125 responses were gathered in this time – a response rate of 21.2 per cent (average response rates for e-surveys are in the 1.5-2 per cent range). This record-breaking response rate is indicative of the level of concern for this issue in the market.
Copyright © 2012 Altus Limited