The new service for sending end-of-year employee pay and tax details to the Inland Revenue via the internet was...
hit by technical glitches on the day it was launched.
Companies that tried to file returns on 6 April ahead of the 19 May deadline were sent a message asking them to try again later.
The problem occurred in the link between Inland Revenue IT systems and the Government Gateway - a portal that gives access to online government services.
Last month the Business Application Software Developers Association warned that the Revenue's PAYE electronic filing system might struggle to cope with demand because it had not been properly tested (Computer Weekly, 22 March).
Although suppliers of payroll software were able to send transactions through an electronic testing system run by the Revenue, they were unable to send dummy transactions through the Government Gateway.
In a statement the Revenue said, 'We identified communication problems relating to the authentication of messages between the Government Gateway and ourselves.'
The problem was rectified after the first day of the online PAYE service.
Initially the electronic filing of PAYE returns will only be compulsory for large employers. However, the Revenue plans to extend this to firms of all sizes by 2010.
Employers who have fewer than 50 employees can get up to £825 tax-free over five years if they file their 2004-2005 tax returns electronically.
The Revenue's online systems for tax returns have been dogged by technical glitches. Online self-assessment systems struggled to cope with a last-minute rush of taxpayers filing returns before the 31 January deadline, leaving some people locked out of the system for several hours.