Author: Yvette Lamidey
Published in: PAYadvice
Date: April 2006
NINO's
NINOs are one of the most important pieces of data that you hold for your employees but getting the correct NINO from your employees can be one of the greatest pains.
Like it or not one of the most important pieces of data, that we hold for our employees/payees is their NI number. Without a correct NINO, communication with government departments becomes more difficult and the employees/payees could be disadvantaged, as their data may not be passed automatically over to their 'personal accounts' within the various systems.
Some employees/payees have been quoting the wrong NINO for years, this could be because the original handwritten card wasn't easy to decipher or perhaps an employer quoted the wrong NINO on a P45 and this has been carried forward from job to job. Or even a badly written P45 has resulted in an incorrect NINO being used by a new employer, the employer may have muddled two people with a same or similar name or a government agency may have made a similar mistake and so on. Wherever there is an opportunity for human intervention within a process then there is an opportunity for human error, try as we might we can't be 100% accurate 100% of the time.
Sometimes employees/payees are not in employment sufficiently long enough for NINO tracing to catch up with them. It is possible that they may have continued to use a temporary NINO, under the old regime, for years and their correct NINO hasn't caught up with them. This could be further exacerbated if one or the employments hadn't properly recorded the date of birth and the more generic TN010101M/F has been used.
The Revenue's NINO matching service takes some time to work through the system as jobs are scheduled to run during computer quiet times at night/weekends. If there is inconsistent or missing data that's been included on the P46/P45 etc. then the matching process, which is manual, is even more onerous and time consuming. Very often, it takes some painstaking matching of part or all of the name, DoB, and address - known as fuzzy matching.
In addition, the knock-on effect of an incorrect NINO can range from
- - Incorrect tax being paid by the employee/payee - this could be an overpayment or underpayment
- - NI contributions not being posted to the employee’s account resulting in incorrect benefits being paid during the person's working life
- - Incorrect NI rebates being paid to a pension fund if the employee has contracted out
- - And in later life potentially the wrong state pension and state second pension being paid.
Not having a correct NINO can also affect the service given to employees/payees by various government departments as it's more difficult to find the correct details on which to base information and decisions.
Through a number of different work streams the Revenue are addressing the problem of incorrect and missing NINOs used by both the employees/payees and employer.
Unfortunately whilst Revenue systems do not need a correct suffix, A, B, C or D, at the end of the NINO the DWP systems do and so this suffix needs to be correct on everyone's system. Hence, you may receive a NINO notification that matches the NINO held on your system all bar the suffix, if you do please update the suffix that you hold. Earlier this year a paper was submitted and discussed as to whether the validation could be dropped on the suffix and employers not forced to hold the suffix on their systems but due to DWP requirements it’s still necessary to hold and validate the suffix. Maybe now that we have greater dialogue with DWP there may be an opportunity to weigh up the cost to the Revenue and the employer to hold and validate this suffix, compared to the cost of DWP changing their system to exclude validation on the suffix, or even accept any character including a 'blank space'.
The Revenue's NINO work streams include involving the BSTs in employer visits so that those with a high number of missing or incorrect NINOs can be helped through the tracing/cleansing process.
There is also the opportunity to use the NINO data cleansing service which can accept details of employee's/payee's in an Excel spreadsheet format and return the cleansed data in an Excel format to the employer who then has the opportunity to upload this onto their HR/payroll system as opposed to manually entering the data which could yet again introduce error. Employers who use the large bureaux/managed service products should find that the supplier can easily provide and accept such files at a reasonable cost or that they may be able to use the system's reporting tools to produce the data themselves. Unfortunately there isn't yet a message in either EDI format or and xml schema that can be used to provide a list of employees and then receive back the NINOs that can be loaded onto the payroll/HR system despite many requests from employers.
Even if your workforce is transient and by the time that you have received back the cleansed data some of the people have left you should still enter the information onto your system so that the end of year information can be posted correctly. Remember that the Quality Standard will apply at this tax year end and NINOs will have to pass specific tests for the data to be accepted.
The Revenue has openly recognised that it needs to improve its own internal procedures as well as those between the Revenue and employers, agents and taxpayers. This is being addressed through the Modernisation of PAYE Processes for Customers (MPPC) programme that is well underway. At the centre of MPPC s a major change programme for all round performance improvement and much of this revolves around interaction with all customers on a number of levels.
We all recognise, including the Revenue, that there is not a silver bullet solution to this age old problem of missing and incorrect NINOs. It is recognised throughout the Revenue that there is a need to continue to work closely with employers etc. in all sectors to resolve these issues.