Revenue's online PAYE filing system will not be able to handle demand, warns Basda

The system used by companies to send Pay-As-You-Earn information to the Inland Revenue via the internet has not been properly...

The system used by companies to send Pay-As-You-Earn information to the Inland Revenue via the internet has not been properly tested and will not be able to cope with demand, according to an influential software industry group.

With the deadline for sending end-of-year employee pay and tax details in May, the Business Application Software Developers Association (Basda) has warned that problems with the PAYE online filing could be worse than those experienced with the self-assessment tax return system.

Although suppliers of payroll software have been able to send test transactions through an electronic testing system run by the Revenue, they have not been able to send dummy transactions through the Government Gateway - a portal that gives access to online government services.

The Revenue's 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.

The volume of information sent to the Inland Revenue will be much higher under PAYE than with self-assessment because it includes company payroll information and tax details.

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.

Dennis Keeling, chief executive at Basda, which represents more than 250 software houses and developers, told Computer Weekly that three-quarters of Basda members said the test service provided by the Revenue was not a rigorous test to prepare for a live tax filing service.

"We have warned the Revenue that the Gateway will not be able to handle the demand for online PAYE returns," said Keeling.

"We believe that there will be major problems. Companies leave filing to the last minute to make sure they do n0t make any mistakes."

Keeling added that he has written to the Revenue's director of electronic business, Barry Glassberg, raising his members' concerns.

Kathryne Jobling, development director at accounting software supplier Pegasus, said, "The Government Gateway is pretty stable but the connection between it and the Inland Revenue's back-office systems is the bit that carries the risk. There are numerous servers and the submission runs the risk of failure."

A spokesman for the Inland Revenue said, "'We have a comprehensive testing plan for our online filing [internet and Electronic Data Interchange] channels, as well as for the IT which will support the new regime for employers. We have been working with software suppliers to help them make sure that their products meet the needs of that new regime."

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