Written by Ben Cocks on Tuesday 15 November 2016
Annuity and pension administrators making PAYE or pension scheme returns to HMRC will need to start planning for two systems changes recently announced by HMRC.
It’s been a long time coming but HMRC have now confirmed that in April 2018 the Electronic Data Interchange (EDI) channel will be decommissioned. Originally introduced in 1998, EDI is now to be dropped and all electronic PAYE returns must be made via the more modern XML channel. HMRC have been planning this change for some years, hoping to avoid the high costs of continuing to support EDI. But only recently have one or two of the biggest administrators started to use the more economic XML channel and HMRC finally has the confidence to pull the plug on EDI.
In parallel with this, HMRC are also making changes to the XML channel. HMRC currently uses the Government Gateway to support PAYE and pension returns made via the XML channel. Originally developed in 2002, the Government Gateway is now nearing the end of its life and is also scheduled for decommissioning in early 2018. HMRC are already working with software developers to provide replacement services as part of the HMRC ‘multi digital tax platform’ (MDTP).
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. Administrators may choose to develop new software themselves or, more likely, will use a third party service provider to handle the XML channel for them in the same way that many of them used external service providers to support EDI.
Furthermore, 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. Recent announcements from HMRC suggestthe decommissioning of these systems will not be delayed any further.