HM Revenue & Customs (HMRC) has introduced a new way of reporting PAYE - called Real Time Information, or RTI.
From 6 April 2013, employers started reporting PAYE in real time. This means that information about all PAYE payments needs to be submitted to HMRC online each time a payment is made as part of the payroll process.
Before reporting in real time, employers and pension providers need to go through a payroll alignment process to help ensure that information on their payroll can be matched efficiently to the correct individual record. Improving data quality is important preparation for a successful transition to RTI.
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Over 80 per cent of data quality problems are caused by holding the incorrect information about an individual's name, date of birth or National Insurance number. Getting this information right is good for everyone. The individual will pay the correct tax and National Insurance contributions and employers and HMRC will receive fewer queries.
Here are some practical tips to help you get your data right:
Please always enter the correct National Insurance number. Do not make up a number, use a default number or use a number belonging to someone else. The number must begin with two letters, followed by six digits and end with a letter which will be either A, B, C or D.
No matter what led to uncertainty over an individual's National Insurance number, you must act to ensure you give HMRC the correct number.
Here are a few examples of the types of things that can go wrong and leave you uncertain about an employee's number:
HMRC's real time information system does not currently recognise National Insurance numbers prefixed 'MA'. Although these numbers are valid in the UK, a message will be sent to the submitter to say that they are incorrect. Employers should ignore such messages and continue to use the National Insurance number supplied by their employee.
If you do not have a National Insurance number for your employee you can trace the correct number using the HMRC National Insurance tracing service.
The CA6855 clerical National Insurance number tracing service will be withdrawn on 31 March 2014. If you are unable to obtain an employee's National Insurance number using the guidance in the link below, you must still send their details on the first Full Payment Submission that reports a payment to them. However, you must leave the National Insurance number field blank for that employee. You must not use an incorrect or 'dummy' National Insurance number.
To ensure the details you have are accurate, you should verify the information you need from an official source such as:
Further tips about taking on a new employee can be found in HMRC's guide 'Taking on a new employee - first steps'.