What Is HMRC's NPS System?

The NPS in the new information data system which was introduced by HM Revenue and Customs in July 2009. This system is simply a massive database and computer which has been used to collate and hold all employer and employee information for National Insurance and PAYE purposes. This is a change from the old system where data was held regionally which resulted in the need for it to be collated annually. There was also a lot of confusion with the old system with the data being categorised by employer.

This meant that it was almost impossible to amalgamate tax records year by year for employees which hold more than one job. This is generally a world wide issue with over 7 million people in America currently working more than one job. Although there has been a stark increase in unemployment figures due to the economic recession in the UK there has also been an increase in people taking part time positions or additional work just to make ends meat. As a result of these increases if employers were still trying to use the old system there would have been the increased risk of duplicate payments and deductions as well as a great deal of confusion between employers and employees.

However, this new system categorieses the data by employee instead of employer. This means that it is a lot easier for employers when it comes to calculating and deducting tax for employees as all the employees information including whether they have more than one job is held in one central location. By having this central resource the aim is to minimise issues in lack of accuracy and streamline the PAYE process. By collating all this information the whole process of PAYE and national insurance is streamlined and accuracy increased with the system even allocating personal allowances and so on.

This should also make the process of VAT returns for the employer easier while the process of external financial reporting and auditing by accountants will also face less barriers. There were several first year issues concerning the quality of data which resulted in multiple coding last year (2009) however after a thorough cleaning process the hope is that things will all run smoothly this year. With the number of coding notices sent out to employers expected to reach a staggering 17-18 Million the success of the new system will not be truly seen until we are into the new financial year in late Spring.

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