HMRC leaps to defence of Bacs software upgrade charges

6th March 2013 | News

The unexpected costs incurred by businesses needing to upgrade their Bacs software in time for the implementation of Real Time Information (RTI) have been resolutely defended by HM Revenue & Customs (HMRC).
 
New joint research carried out by Payroll Alliance and the Chartered Institute of Payroll Professionals found that some firms are incurring vast additional costs in order to comply with new RTI regulations.

However, HMRC believes the associated fees for upgrading with Bacs-approved software suppliers are "low or negligible". Of course, whether the fee is ‘low or negligible’ depends entirely on your viewpoint.
 
Within their Bacs file companies will be required to include a hash total in field seven to ensure its payments match against RTI submission.

Following a survey of 156 respondents, 40 per cent of employers and payroll bureau who use Bacs are being charged for this upgrade to their software and in some instances users are being charged as much as £30,000.
 
Nearly 40 per cent of respondents who revealed they were being charged for Bacs upgrades were paying between £1,000 and £4,999, with eight per cent of those surveyed having to fork out more than £5,000.
 
Despite the results of the joint survey, an HMRC spokesperson insisted the charges only apply to a small number of businesses who pay their employees by Bacs using their Bacs Service User number.
 
"Bacs approved software suppliers tell us that the costs associated with providing the additional information required for RTI for field seven of the payment instruction is low or negligible," he added.
 
Linda Pullan, head of Payroll Alliance, added that although some businesses are choosing to participate in Bacs upgrades to improve the functionality of the service, there is a significant number who are forced to do so to ensure compliance.
 
"The survey results confirm that employers are sometimes having to pay large amounts to cover the cost of the Bacs upgrade. This is an unavoidable expense given that the hash total in field seven is a requirement to be RTI compliant," she said.
 
Click to read the full results of the RTI Software Costs Survey.