We have become increasingly aware that Jobcentre Plus (on behalf of the Department for Work and Pensions) has been issuing a KC NINO prefix. This was not on HMRC’s list of those that are recognised
Before the start of each tax year, software developers receive a list of valid National Insurance number (NINO) prefixes, i.e. prefixes that HMRC’s systems will recognise. For 2016-17, this information came in the form of the Message Implementation Guidelines (MIGs) issued in November 2015. While these are specifically directed to developers for electronic data interchange (EDI) submissions, similar guidance was given to developers who use file submissions by Internet.
The last page of the 166-page document shows the valid NINO prefixes for 2016-17. Software is often set to only allow these to be entered into the payroll. It is necessary to prevent the entire Full Payment Submission (FPS) rejecting when it hits HMRC’s systems.
This week, we have become increasingly aware that Jobcentre Plus (on behalf of the Department for Work and Pensions) has been issuing a KC NINO prefix. This was not on HMRC’s list of those that are recognised. The consequence is that either payroll software has been unable to accept the prefix or the FPS has rejected when it tries to hit HMRC’s systems. Employers beware:
Entry of a KC prefix will cause your FPS to reject at HMRC (if payroll software allows you to enter it in the first instance).
This is very, very unfortunate to say the least. The issue has been reported by lots of people and organisations to a number of people in both HMRC and the DWP. We await further guidance. It could be that HMRC’s specifications have missed this prefix and it should have been included in its November 2015 specifications. Or, it could be that the DWP has started issuing it without consideration of the agreed specifications. Regardless, there is a problem.
Aside from the above FPS rejections, there are other implications. For example:
• If no NINO is declared on the FPS, payroll software will require the first two lines of the address to be entered for the employee. Indeed, like current gender, these two fields become mandatory. If you have a KC prefix, please obtain this information if you don’t already.
• I am aware some pension schemes will reject file submissions if the NINO is excluded. Will the absence of a NINO in the payroll system impact the reporting you need to do? You might want to check with your pension provider if you are impacted.
• The NINO is important so that HMRC can allocate the National Insurance contributions against the individual’s “account” on their systems. This is important for entitlement to things like certain benefits, Universal Credit and state pension. Will the absence of a NINO cause issues? If software does not allow the entry of the KC NINO it will not appear on the payslip. The employee has a right to be concerned if their NINO is not sent to HMRC.
As at 8 July 2016, UK payroll and software professionals await further instructions on how to proceed with this issue. Will there be an HMRC workaround for employers, will revised specifications be issued for software developers or will HMRC sort it out internally? Employers need to consider the above implications today. Something has gone wrong this year, so please do not blame your software or payroll provider. Software is built in accordance with HMRC’s guidance and it appears the 2016-17 guidance does not conform to what is happening in reality.
As an aside, if you have the time, try and decipher the 165 pages before page 166. I understand some of them. However, trying to understand this huge document does make you realise how much we rely on software developers’ knowledge and expertise.