The recent issue of the Inland Revenue's Notes for Software Developers explained that the Revenue's internal systems for handling and processing online year-end returns for 2004/05 will be implemented in two stages:

• Stage 1, from 6 April 2005, will involve filing, validation against the Quality Standard and acceptance of employer returns made online using the Internet or by EDI. It also includes the receipt and capturing of magnetic media and paper returns.
  
  
• Stage 2, between mid-May and mid-June, when the returns information is sent to the Revenue's back end systems for employer, taxpayer and contributor record to be updated.

The article in that issue of Notes for Software Developers contained a number of errors in its explanation of how magnetic media returns are affected by this two-stage implementation. We queried a number of points in the article and the following guidance is based on the corrected information that the Inland Revenue provided to us.

Processing of magnetic media returns

The standards that must be met by magnetic media returns are set out in the magnetic media Technical Specification, booklet CA51/52 Submitting Year End Returns on Magnetic Media. The standards were published in April 2004 and are similar to the Quality Standard that applies to Internet and EDI returns. Returns that do not meet the full requirements of the CA51/52 will be rejected on the basis that they are not in the prescribed form.

When the magnetic media returns are first received, the Stage 1 process is only a check to ensure that they are readable and have no obvious completion errors. If there are any errors, they will be returned to the submitter.

Once the magnetic media returns have successfully passed the initial checks, they will be held until the Stage 2 validation begins from mid-May onwards. Only then will the P14s be subjected to the more detailed CA51/52 checks. As a result, this late identification of validation errors will not allow sufficient time for correction before the 19 May submission deadline.

To accommodate employers whose magnetic media returns are rejected, the Inland Revenue will allow employers two weeks from the date of the rejection letter to make the corrections and resubmit the return. If the corrected returns are not received within two weeks, the employer may incur a late filing penalty on the basis that they were not received in the prescribed form by the filing deadline.

Processing of paper returns

A similar situation will apply to paper returns. They will be checked on receipt to ensure that they have been made on the correct form, are readable and contain all of the required information. Where there are errors, they will not be accepted and will be returned to the submitter for correction. Returns that are of an acceptable quality will be recorded as received and the data will be captured. No further processing will take place until the commencement of Stage 2. The submitter will be contacted about any further validation errors that are identified during this later processing but, as long as the returns were received by the 19 May deadline, the employer will not incur a late filing penalty.

Magnetic Media Test Service

A limited service for checking magnetic media data against the CA51/52 standards is being provided by the Inland Revenue from 31 January 2005. Employers and bureaux may send their data to Magnetic Media Test Service, Room BP2102, Benton Park View, Longbenton, Newcastle upon Tyne, NE98 1ZZ. The telephone number is 0191 225 7932.

Data may be sent up to two weeks earlier than 31 January if that would be helpful. Data can only be submitted on CD or floppy disk. The test team will perform the following checks:

• P14 Field and Format Checks against the CA51/52 standards, and
• ECON and PAYE Reference checks.

Responses will be sent back to employers and bureaux with a paper report detailing the number of errors by data field. The testing team will aim to respond within ten days of receiving data.

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...back to 7 January 2005


Sources:
www.inlandrevenue.gov.uk/comp/notes-10-21.pdf
www.inlandrevenue.gov.uk/leaflets/ca51-52.pdf