Can You Speak XML? Why UK Businesses Need to Act Now

With the shutdown of the UK government’s EDI service imminent (April 20), Gillian Bricalli of EDI specialists Data Interchange explains what affected companies now need to do:

The UK HM Revenue and Customs (HMRC) is currently repositioning its UK PAYE operations as part of its digital strategy. This includes the shutdown of its EDI service by April 2018. Therefore, current EDI users will need to migrate to the XML channel before the deadline.

There will be two basic changes this month that will affect every organisation in the UK, which is using EDI for sending payroll data to HMRC. The first one affects the communication channel. At the moment, HMRC supports two systems: the Government Gateway via HTTPS and a traditional EDI connection. Currently, organisations can send their data and files with the payroll information via both paths. To simplify the processes, HMRC decided that the Government Gateway will be the only communication channel starting in April 2018 and that the EDI service will be closed, including ISDN, AS2 and value-added network connections.

The second change: Within the outgoing EDI service, businesses could send their data as GFF files. This will no longer be possible, because the Government Gateway web-service will only support XML files. That means, the affected companies and organisations will have to change their communication protocols and file formats before April 2018. But until now, there are a high percentage of companies in the UK, who are still using the EDI method and have not moved. The reason for that: The data with the payroll information is created by the payroll system. So, when organisations run their payroll every month, the instructions to the government are also created from that system – and they are created as GFF files.

Most of the payroll providers are not yet ready for exporting XML files. Many are still in the testing phase. This is very concerning for companies, because of the end of their financial year. As the business year closes in March, they have to run the systems in April. And the last thing they want is to have a big change of system, when they have to run their payroll service for HMRC. So, a lot of companies are saying that February or March is too late.

What to do?

An alternative to just waiting and hoping is the use of extensions from other providers. For example, Data Interchange has built a plug-in into their EDI product, which changes the data from the GFF format into the XML format. This is used as a contingency solution for the transition phase. But even after the migration to the XML format – in most cases in the middle of next year – the EDI provider can help to send the right data with the right connection in the right file format to HMRC.

This ensures a higher level of security in view of the fact that HMRC will fine companies for sending incorrect data or the wrong file formats. The more data files that are affected, the higher the fines will be. So, this could get quite expensive, especially for large businesses, because they have many thousands of staff. If they send their data by an EDI provider, they get additional levels of security. They see that the data is sent to HMRC, the data is good and what is wrong, to correct and resend the data. So, many customers still want to use these features in the future, which will not be provided by the Government Gateway service.

To begin with the migration, companies have to check:

• If they can generate an XML file with data from their payroll system
• If they have upgraded their EDI system to meet the new standard
• If they have personal credentials for the Government Gateway web-service

The EDI provider can support companies at all steps in migrating the processes, including testing and monitoring – with individual solutions.

Tweet