Each year, software developers receive guidance from HMRC on the National Insurance Number (NINO) prefixes that their systems will recognise. Such guidance (page 166) came on 02 November 2015 to developers for Electronic Data Interchange (EDI) submissions and similar guidance was given for those that file submissions by Internet. Employers need to be aware that using a prefix that is not in this guidance will cause the Full Payment Submission (FPS) to reject – simply, HMRC’s system will ‘say’ that it is not valid. It may be that software will prevent an invalid NINO prefix causing a rejection by only allowing certain prefixes to be entered.
Recently, some employers and payroll providers have received NINOs that are prefixed KC. KC was not on HMRC’s list of valid prefixes. The NINOs were issued to employees by Jobcentre Plus on behalf of the Department for Work and Pensions. The result is that employers / providers are entering this information into their payroll software which has either rejected it immediately or caused the FPS to reject once received at HMRC.
Something has gone wrong this year. Maybe HMRC missed the prefix off of their list or maybe Jobcentre Plus started issuing NINOs with this prefix earlier than they anticipated. Whatever the reason:
- KC is a valid NINO prefix and employees should not be referred back to Jobcentre Plus
- Employers / payroll providers and software developers are not at fault. They use or develop software in accordance with HMRC’s instructionsDuring the last couple of weeks, the scale of the issue became apparent and more and more employers started querying KC prefixes, possibly as a result of the FPS rejecting. On 08 July 2015, HMRC’s PAYE Service Issues page was updated with a message about the prefixes. This was repeated in an E-Mail by HMRC’s Software Developer Support Team to software developers. It is only correct that I try to ensure that this information is cascaded to as many people as possible:
We are aware that a small number of National Insurance numbers with prefix ‘KC’ were issued recently and that these are causing some problems for our customers.
The National Insurance numbers with the prefix ‘KC’ are valid and customers receiving them should use them as normal.
If you are experiencing issues when submitting Real Time Information (RTI) data for an employee with this National Insurance number, the following steps should be taken:
- the National Insurance number field should be left blank
- you should make sure the employee address field is completed in those cases
- if you/your employee has a ‘KC’ National Insurance number, they don’t need to request a new one
We are working hard to resolve this issue quickly and will provide more information shortly.
So, an immediate workaround has been issued for employers / providers and developers. This really translates as follows:
KC is a correct NINO prefix, however, do not enter it into payroll software. Even if your software allows it, currently, it will reject at HMRC (unless your software supresses the information before the FPS is created). Follow HMRC’s guidance and leave the field blank. As a consequence of doing this, the first two lines of the employee’s address become mandatory.Other submissions that include the NINO will have to be considered. For example, some pension scheme returns require the NINO. Whilst a valid NINO, a KC prefix should not be in payroll software so will this impact you pension returns? Possibly, contact your pension provider if you are affected.
There is no action required – at the moment
Keep your eyes peeled for KC developments in the near future. We haven’t heard the last of this.