I have just acquired a new payroll client. I use Moneysoft, and the previous payroll agent used Sage.
The handover information included an extremely long (20+ digits) "RTI Payroll ID" for each employee.
Is this information required when I transfer the employee details on to Moneysoft? I generally don't use Payroll IDs for new payrolls that I have set up myself, as my payroll clients are all very small employers with at most a handful of staff. I am not sure what the use of such a lengthy number would be. It doesn't even fit on the payslip!
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RTI
My understanding is that if you do not use the RTI Payroll ID when transferring across software it will create duplicate records at HMRC.
use it once
You should initially use the same ID as was used in Sage. After sending your first FPS you can then change the ID (to something shorter / more suitable) within Moneysoft.. The change of ID will be reported to HMRC on the next FPS.
Interesting...and rather than start a new thread...where do you find the payroll ID within Moneysoft? Im taking over the payroll for a client who uses Moneysoft also.
Yeah I saw that and thought it must be somewhere else? So will submitting month 2 from my end on Moneysoft cause a duplicate?
No duplicate
Richard Carey speaks for Moneysoft. I assume that Moneysoft will automatically set the flag on the second FPS to say that the Payroll ID has been changed. Do as he says and a duplicate record will not be generated subject, of course, to HMRC's systems working as they should.
Moneysoft does not generate a Payroll ID automatically. It is what you choose to enter in the Works Number/Payroll ID box on the Employee Details > Work tab.
Automatic payroll IDs
Moneysoft does not generate a Payroll ID automatically. It is what you choose to enter in the Works Number/Payroll ID box on the Employee Details > Work tab.
Actually since a recent update, Moneysoft can generate an ID automatically. On the Employer Details screen, there's a tick box at the bottom "Ensure all employees have a unique works number / payroll ID".
If you tick this box, any new employees that you create will have the next available number automatically inserted in their works number/payroll ID field. Very handy for some of our payrolls with a high turnover of staff.
I haven't tested to see if it will in-fill any existing employees without an ID, but I don't see why not.
I was transferring a payroll from Sage to Brightypay to commence the new tax year.
Brightpay said it was not necessary to use the ID generated by Sage as it was the start of a new tax year. Brightpay generated a new ID for each employee.
I also use QTAC Mamut payroll and it has a box to tick if you do not know the previous ID so I can only assume this generates some info for HMRC when the FPS is sent.
My understanding is it will not cause problems if changing at the start of the new tax year.
Stupid Question
It may be a stupid question....but why does HMRC need a payroll ID? Surely the NI number should be unique within each employer?
Not a stupid question
It may be a stupid question....but why does HMRC need a payroll ID? Surely the NI number should be unique within each employer?
Because some employers have mutiple employments per NINO per scheme?
Multiple employments in a scheme
It may be a stupid question....but why does HMRC need a payroll ID? Surely the NI number should be unique within each employer?
If an employee leaves and restarts that is a different employment and should have a different payroll ID. But their NINO would still be the same, of course.
You're kidding
Employees with multiple employments may have the same NIÑO on each employment. NINO may be unique to individuals (apart from the 2,000 that use AB123456C - yes it's areal NINO). They are not unique to an employer.
Typical HMRC complexity
I don't know why HMRC like to create additional complexity where none is required. As Williams Lester point out, the NI number is already a unique identifier and remains fixed for life, irrespective of the software used, so there is no need to create a second identifier that will be changed every time the employer changes and may be changed on a change of software. The combination of NI number and employer reference also uniquely identifies the particular employment, so a reference is not also required for that. Tom McClelland and PBH64 suggest that a second employment for the same employer requires a new code; why can the software not just add a suffix to the NI number in that situation?
Surely it is also time for HMRC to merge the Accounts Office Reference and PAYE Reference, as a second reference number for the same employer is surely redundant?
Required
I don't know why HMRC like to create additional complexity where none is required. As Williams Lester point out, the NI number is already a unique identifier and remains fixed for life, irrespective of the software used, so there is no need to create a second identifier that will be changed every time the employer changes and may be changed on a change of software. The combination of NI number and employer reference also uniquely identifies the particular employment, so a reference is not also required for that. Tom McClelland and PBH64 suggest that a second employment for the same employer requires a new code; why can the software not just add a suffix to the NI number in that situation?
The ID is required in some cases, which is why it's an optional field. You use it when you have to and you can not use it when you don't have to. In practice, your software may dictate that you must use it at all times.
A suffix on the NI number means that it is no longer the NI number and is no different than a separate payroll ID. If the person has two employments, you still ned a way to distinguish the two employments and putting that on the end of the NINO doesn't make life easier. With a single submission at year end, HMRC could simply count how many P14s you submitted for that person. That isn't an option under RTI and leads to the payroll ID.
HMRC's handling of mistakes around the payroll ID and the disputes that arise is terrible and leaves employers with nowhere to go, but that doesn't mean that the ID requirement is unnecessary.
Duplication is in theory still a problem when changing software/accountant at the start of a new year. You are setting up new employments instead of continuing the old ones but it isn't as big a problem because there's no overlap in the figures being submitted. The old ones will be closed when they've not been paid for a while and it will largely solve itself. You could see some oddities with tax codes at the beginning.
Two factor identification?
Charliecarne said,
"Surely it is also time for HMRC to merge the Accounts Office Reference and PAYE Reference, as a second reference number for the same employer is surely redundant?"
I'd be nervous about that. Fat fingers and automated systems are dangerous bedfellows. Having to quote both correctly proves the link. Only having one and all you have to do is to luck upon a valid combination and your data or payment could end up anywhere?
Two references for the same employer
Having to quote both correctly proves the link. Only having one and all you have to do is to luck upon a valid combination and your data or payment could end up anywhere?
Following that logic, we should have lots of references in case the first two are "lucked" upon :) So long as the reference is deemed complex enough to be secure, splitting it into two is confusing for clients and unnecessary. In any event, when making a payment, you only use one reference, so the second only serves to prove ID when calling HMRC and doesn’t stop the payment ending up “anywhere”. It adds complexity for no increase in security. Other security questions can be asked when calling in to prove ID, instead of having multiple references for the same entity.
@charlie
Thanks for this great suggestion and indeed since most HMRC payroll offices in in the same place it would make sent to change to Accounts Office REf.
But do you think HMRC would agree.
Seems to me
that this is an HMRC problem.
I employee on 2 payrolls with the same employer is cumulative for NI anyway. I taxpayer with 2 or more separate employers comes up on different employer references anyway.
My understanding of RTI was to enable income from any 1 taxpayer to be accumulated as the year progresses, thus simplifying (if possible) PAYE codes and tax credits and benefits.
Therefore if the Revenue computer programme has been correctly written the NI No should be the only ID required.
Multiple simultaneous employments
that this is an HMRC problem.
I employee on 2 payrolls with the same employer is cumulative for NI anyway. I taxpayer with 2 or more separate employers comes up on different employer references anyway.
My understanding of RTI was to enable income from any 1 taxpayer to be accumulated as the year progresses, thus simplifying (if possible) PAYE codes and tax credits and benefits.
Therefore if the Revenue computer programme has been correctly written the NI No should be the only ID required.
Employees sometimes have multiple simultaneous employments with the same employer. For example they may do 2 part time jobs with different NI table letters because of different pension schemes (this happens particularly in public sector or some large private employers). Without multiple employee IDs HMRC can't tell whether the second payment notified in a pay period from the same scheme is a correction or a second employment in that scheme.
NINOs are not unique in employment (necessarily)
HMRC keep records for each employment instance.
The Payroll ID acts as an identifier often for the employer as well as HMRC. They are often used for automated handling of tax codes, so often they will identify the payroll service, client and employee. That way tax codes and Student Loan notices are then applied automatically.
When transferring employees in a continuous PAYE scheme employment, notifying the old payroll ID is wise, else HMRC may accidentally create a duplicated employment.
You may think that as a transfer takes place at the start of the tax year all will be well. Don't be fooled. The payroll may reconcile, but it is likely that HMRC will have two open records and start issuing secondary employment tax codes such as BR, D0 and D1. Employees may get really upset, especially as the codes are generally issued cumulatively.
OK
Therefore the only employers that need employee ID numbers as far as HMRC is concerned would be those that have more than one payroll.