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You will have to upgrade to the 2017 version before you can process 2017 wages or run the 2016 P35.
We recommend running the update as soon as possible. You can still process 2016 wages using the 2017 version by selecting '2016' in the 'Year' drop down at the top left of the Payroll screen. However, if you do not have time to run the upgrade, or wish to defer it, then there is no problem finishing processing 2016 payments using the 2016 version
Please check here for solutions to common P35 problems:
If your version is higher than the instructions, this is fine. For example, 2017.03 is a later version than 2017.02, and contains all the changes of 2017.02. Every time we release a new version, we increase the version number. At the beginning of the year we often release multiple new versions, often with minor changes.