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EDI with the Inland Revenue A Case Study by Standard Life

 

Standard Life

Standard Life, with more than 12,000 employees world-wide and 7,300 staff based in Edinburgh, is one of the leading mutual financial service companies in the world and Scotland's largest private employer. In 1997/98 it sold 529,000 policies in the UK with a total new premium income of over £1¼billion. Although more than 170 years old it is today a thoroughly modern multinational company, seeking to achieve excellence in every aspect of its business.

Objectives - Standard Life were keen to move away from the paper reporting system and the time spent by staff in processing P6, P45 and P46 tax documents was considered substantial enough to warrant the implementation of an EDI system. There was also a need to reduce the number of errors encountered, which in some cases only came to light much later. Although the company did not have an EDI infrastructure in place already it was deemed essential to develop and maintain a system which could be used to incorporate the Revenue's EDI system.

Background - Standard Life currently run a payments system with over 100,000 PAYE annuity records which provided the means to test how well the EDI facility performed.

BEFORE EDI

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Prior to implementing EDI, the manual workload was carried out using internal resources only, with an unacceptable number of errors encountered for both incoming and outgoing tax documents, e.g. 28% error rate on receipt of P6s. The data capture of 90,000 coding notifications per annum involved a large amount of checking and verification in order to ensure valid data was entered. Errors were invariably encountered, related in the main to Works Number References. The 3,000 P45s and 15,000 P46s sent to the Revenue annually were prepared and despatched on a manual basis. In both of the above situations it can take up to a week from when the business document is created before it is entered onto the relevant computer system. Standard Life report that the costs involved to process P6s and P45s alone were estimated to be tens of thousand pounds per annum, involving over 1000 man-hours.

Perceived Benefits of introducing EDI - the main benefits were perceived to be:

  • send and receive accurate data, thereby improving upon servicing standards; ·
  • free up staff to concentrate on other key matters; ·
  • operate efficiently; attain longer term cost savings.

The EDI system - inbound P6 messages are currently received from the Revenue on a daily basis. Outbound P45 and P46 data is batch processed overnight and transmitted to the Revenue on a daily basis.

AFTER EDI

flow chart

Actual Benefits - the actual benefits achieved were:

  • paperless environment with fast (automated), efficient application of data and electronic data storage;
  • accuracy of data reporting allied with error reduction;
  • financial and operational integrity;
  • improvement to audit trails with 'guaranteed' data receipt;
  • security of data;
  • increase in data integrity, including Revenue files;
  • reduction in postal and stationery costs;
  • a progression towards moving all IR data to EDI;
  • correct tax code and deduction for pensioners, first time, on time.

Savings - the savings following the implementation of the EEC EDI facility were not insubstantial, although other matters were considered equally important and vital to the success of the system, e.g. accuracy of data and reduction in errors. Indeed, overall savings are quoted as being tens of thousands of pounds per annum including the many hundreds of man-hours saved.

Conclusion - Having the foundations in place, further EDI development becomes straightforward and relatively inexpensive compared with the original development. The Inland Revenue EDI system implemented by Standard Life forms part of a wide range of Standard Life e-commerce initiatives.

Tax Office View - John O'Donnell, EDI Liaison Officer at Centre 1 (East Kilbride), reported that the introduction of the EDI system has led to a radical improvement in the quality of data being exchanged between Standard Life and the Revenue with substantial benefits being obtained by both parties. As far as John was concerned this is the only way forward for all big employers, with liaison between the Revenue and individual Employers being essential at all stages of the project life cycle. Exchanging tax data electronically simplifies the entire process for both parties.

Thanks - the above information has been kindly provided by Standard Life Annuity & Pension Payments, notably Anne Murray, Annuity & Pension Payments and Ruth Chandler, Customer Service Manager.

The Standard Life Assurance Company* is a mutual company registered in Scotland (SZ4) Head Office Standard Life House 30 Lothian Road Edinburgh EH1 2DH

Tel (0131) 225 2552 Standard Life may record and monitor telephone calls to help improve customer service.

The Standard Life group includes Standard Life Pension Funds Limited* **

Standard Life Trust Management Limited * **Standard Life Investments (Mutual Funds) Limited * **Standard Life Savings Limited*

*Regulated by the Personal Investment Authority

**Regulated by IMRO

 
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