Examples after all from HMRC for software developers

"HMRC has previously published example data which some developers have used in testing the tax and National Insurance calculations in their payroll products. Based on usage figures for the 2017-18 example data for tax and NI, it has been decided that example data will not be provided for the tax year 2018-19. The 2017-18 data will remain on gov.uk for reference."

This came as a huge surprise and shock to developers. After all, payroll software does not update itself by magic and all developers update in line with legislation and the guidance provided by HMRC. One of the reasons for this is to ensure that software is operating throughout the profession with consistency. This means that HMRC’s ‘Payroll Test Data’, which contains examples for income tax, National Insurance, etc, is used to ensure that there is no possible interpretation between one software provider and another. This has been the case for many years.

The protestations from software developer representative bodies such as the British Computer Society (BCS) and the Business Application Software Developers Association (BASDA) were strong, citing that removing the test data from 2018-19 was disappointing, to say the very least. Individual software developers also made their feelings well known to HMRC.

At the start of 2018, HMRC wrote and conceded that they had not fully understood developers’ needs. This manifested itself in an e-mail on 17 January 2018 from Mr Dawkins that read:

"I wrote to you on 21 December to advise that 2018-19 payroll test examples would not be provided.

"As a result of a review of feedback to this decision, I am pleased to advise that some 2018-19 examples for both tax and NICs calculations are now provided.

"Please find attached two spreadsheets. The first is the NICs examples which provide similar coverage to previous years. The second gives tax examples which at this stage are more limited in scope; but the intention is to provide a wider set of tax examples shortly. If you are wishing to test now, this smaller set should give you confidence in your 2018-19 calculation routines for Scottish and UK taxpayers."

We have software developers and their representative bodies to thank for HMRC’s U-turn here. Quite why HMRC issued the original e-mail is very unclear save, perhaps, to guess that things had got more complicated for developers and HMRC were struggling to cope with producing the guidance in the first place.

So, for 2018-19 at least, users of software should feel reassured that products will be tested against the results that HMRC expect. However, this debacle has highlighted two things to me:

1. The power of protestation and the dedication to accuracy of the payroll software developer profession;

1. Possibly, there is a better way of providing this information, maybe in line with HMRC’s own API strategy. However, any change can only occur after the necessary consultation with the community that it will impact.

A welcome U-turn for UK payroll professionals, though consultation on change and change itself is inevitable.