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@norstar
Understand your frustration. If you know the correct code then use it. Why bother with HMRC at all when they are cocking up. Let them chase you if they feel they are right. When compliance is wrong then it is time to correct it.
PAYE codings
Understand your frustration. If you know the correct code then use it. Why bother with HMRC at all when they are cocking up. Let them chase you if they feel they are right. When compliance is wrong then it is time to correct it.
Just one question (I fully support your suggestion subject to the following concern that I have being addressed):
Is it not the case that an employer (or payroll agent) runs the risk of HMRC penalties or un-deducted PAYE tax liabilities, if as I have a current case, HMRC have issued a BR code when the client has no other income so following your suggestion code 944L is applied. Yes no tax underpaid overall, but on a technicality couldn't HMRC come back and assess the employer for under-deducted PAYE as employer is non-compliant by using 944L instead of BR?
In these circumstance (in my case a one-person director only payroll) I will be 'phoning HMRC to get the proper code put in place, to avoid the risk that I am concerned about.
This wrong code numbers issue has the potential for friction being created between employees and their employers plus between employers and their payroll agents. Time-consuming errors and hassle created by HMRC who say that the system is "working as anticipated".
Cloud cuckoo land
Having just spent the whole afternoon between the software and HMRC help line - you cna spot the problem a mile off.
Mine is a very simple payroll - two directors with one PAYE pymt made in Dec and one small monthly payment to part-time. Can't handle the one annual payment.
IT IS EXTREMELY OBVIOUS THAT RUTH OWEN DOESN'T HAVE A CLUE HOW SMALL BUSINESSES OPERATE. A SIMPLE PROCESS MADE EXTREMELY COMPLETED BY HMRC's OWN PROGRAMMING SOFTWARE. WHAT A NIGHTMARE. GOOD JOB THEY ARE NOT IN BUSINESS THEMSELVES AS THEY'D BE OUT OF ONE. PITY ITS HMRC.
Basically I'm having to spend my time as a Director sorting out a simple issue that should have been resolved way before this got launched.What were they smoking? (as opposed to what is she smoking now?)
One suggestion is to pay the over-amount now and then reclaim - surely you're not serious? Paying an amount that isn't due?
Don't call me Shirley - Leslie Nielsen couldn't have made this up......
@Nicki
I too have clients that have decided to end PAYE and either retire or reduce workload and income. Running a "one man band" business these days is not easy and I believe the powers that be are purposely making it like that. They do not want us, but they will regret what they are doing when it all collapses around their ears. Roll on the next general election.
@ johnjenkins
Thank you John, I'm pleased to know I'm not the only one who feels that way! I think we are indeed a dying breed and I certainly feel jaded by it all. I also feel very sorry for some of my clients who are struggling to earn a living as it is and now dread future developments. At least I have a husband who is semi-retired and now drawing his state pension, so I am lucky enough to be able to choose to let some work go. I just hope an election will result in a modicum of common sense prevailing.
Find a way!
This is my message to clients in this sort of position - find a way of not being a PAYE employer at all!
Granted this is not always easy, but overall it is worth the effort. For those who will say "It cannot be done" I simply say:
We can put a man on the moon.
We can figure out there are more stars in the universe than grains of sand on the average beach.
We can find a way out of PAYE if we need to! (A legitimate way.)
RTI
I would like to make three suggestions on how to improve RTI.
1. The system should only operate for companies who have a P35 total PAYE/NIC of £100k or more. Many one-man companies paying minimum salaries and dividends only pay £100 per annum tax and NI and yet receive numerous threatening letters during the year - the postage must cost more than the tax take.
2. Frequently, when a threatening letter has been sent, it emerges that e client has paid, but the funds have been misposted by HMRC to either a preceding year or a suspense account. There should be a rule in HMRC offices whereby before a letter is sent out, the account should be checked for apparent overpayments in previous years.
3. HMRC's Basic Tools have various bugs and operational issues. Clients who have tried using them have encountered problems which the "helpline" cannot or will not fix. Therefore, they have had to buy third party software. It is outrageous that the taxpayer has to pay to subsidise HMRC's failings. There should be a reward/incentive payment - like there was for filing P35's electronically - to rescue a bit of goodwill from all the grief this sorry business has caused.
One might be forgiven for thinking that the ICAEW should be making these points - after all, we pay them enough to represent us. Perhaps their relationship with HMRC has become a little to cosy and masonic.
Dont do payroll
30 years ago we did payroll and then decided there was no money in it, so stopped doing it.
When RTI came along we seriously looked at it and decided it wasn't worth the hassle. For director only companies we now do the payroll and once they employ even one member of staff, send them along to a payroll bureau. Works a treat.
3 excellent points and one misconception
euanjohn,
Your points make a lot of sense but you appear to have forgotten that we're dealing with HMRC. I'm not at all sure what skills and qualifications are required to work for The Government but intelligence and common sense are apparently not amongst them. I am not a member of the ICAEW but I am familiar with their involvement with HMRC in regard to RTI; they certainly are not cosy and as for masonic ... I have no knowledge or experience.
Perhaps if all the readers and contributors to this forum sent it to their MP with some suitable words we might get questions in Parliament but my sense is that without significant publicity we shall just meander on to inevitable failure.
And then what?
Write to your MP and your chosen national news outlet and let's see if we can make something happen
There is a way of beating RTI
and that is for all employees and employers to decide that all workers are to be self-employed. As long as the contract for services is worded properly and adhered to then there will be no problems. At the very least it will make the government think about what they are doing to small business.
If the politicians are too frightened to change the system then perhaps we should do it for them. Watch how employers nic would disappear if everyone went self-employed.
But Self-Employment is worse than RTI for UC
But that is going to cause huge problems for Universal Credit - those workers will have to submit monthly accounts which is far more erroneous than RTI.and that is for all employees and employers to decide that all workers are to be self-employed.
@Johnjenkins
and that is for all employees and employers to decide that all workers are to be self-employed. As long as the contract for services is worded properly and adhered to then there will be no problems. At the very least it will make the government think about what they are doing to small business.
If the politicians are too frightened to change the system then perhaps we should do it for them. Watch how employers nic would disappear if everyone went self-employed.
I hope all the non-accountants here do not read this above and decide this is the green light solution to RTI here.
There are many considerations, that this solution does not consider - with just a few being:
- IR35
- SSP
- State pension contributions
I think we need to consider what we post here with care.
@DMGbus
I take your point, however we are in the age of self assessment and we should be able to make that work for us. So we know the code is wrong, we know exactly what the code should be so why bother chasing HMRC because as soon as they realise their mistake (by our constant reminders which they count on) they will alter to the correct code.
What I am saying is let's put the boot on the other foot and let them do the work. As for penalties :- it would be interesting to see what the FTT would make of it. A penalty for getting it right - cool.
It's good idea, John
However, the result would be even bigger sticks being used on small businesses to make them 'compliant'. They are a much easier target than the large companies & multinationals. They are the only ones who can get away with making employees self-employed, plus the BBC, government, etc.
The ICPA is currently highlighting how HMRC are targeting lots of small businesses to make up for the tax lost, rather than large business.
A couple of points
@Stepurhan - RTI is impossible to comply with in many cases. As a bureau the employer tells me they wish to pay their employees on 28th and send me the details on 20th, overtime etc being paid a month in hand. I prepare payroll, dated 28th and send schedule to client on 25th asking for confirmation so I can make FPS submission.
On 29th client comes back with confirmation and says btw, paid them 26th!
Or are you saying I should make submission without prior confirmation from my client?
@ Euanjohn
"1. The system should only operate for companies who have a P35 total PAYE/NIC of £100k or more. Many one-man companies paying minimum salaries and dividends only pay £100 per annum tax and NI and yet receive numerous threatening letters during the year - the postage must cost more than the tax take."
I like the idea, but the main reason for RTI was universal credits, I would imagine most of the benefit claimants the information is required for will fall in this section of the data
To my mind, as I think most involved with the sharp end also think, all that is needed is a monthly reporting requirement and agents ability to overide tax codes as necessary.
Over riding tax codes
I am in industry and process pay for each of our three companies - weekly and monthly. I also do some charities payrolls.
I will never over ride a tax code sent to me. I will let the employee know if it appears that there is an error and they can fight that battle but I will still use what HMR&C send me. But a monthly reporting requirement seems sensible to me.
A separate issue is that sometimes I don't get the notification email of a change so I only find out about it when the employee asks me why the code hasn't changed - if they realise and/or care. It also irritates me that the email never states which company it is aimed at so I have to check them all but I am going off at a tangent so will shut up now.
Your separte issue
Your "separate issue" really bugged me too until I installed the PAYE desktop viewer from HMRC - still not a perfect system but it does highlight which employer has been issued with a new notice of any kind.....doesn't mean they'll be right but at least you'll know who's just received a tax code!
Tax codes
If I act for the employee as agent I will call HMRC and tell them to amend, the agent contact centre is very good at doing this.
If it is the employee and I doubt the code is correct I will not process it and tell the employer to have the employee call HMRC, I give the contact details and necessary information, as well as a guide on what to say to the employee.
This is part of my service and why, although more expensive than a bureau, clients are happy to use me for payroll.
I will not put an employee on BR or worse, D0, if I know or 99% suspect it is wrong before having it investigated - how would you feel if your salary is £2000 and you had £800 tax taken instead of the correct £243? Ok, you get it back next month, but that won't pay this month’s mortgage, or childcare fees etc. - and what if it is month 12?
RTI
I'd just like them to drop this use of the word 'customers'. We don't have any choice. Go back to 'taxpayers', which is what we are.
It's typical of the sort of political muddle speak sound bite that gets issued these days, backed up by highly selective 'statistics' that don't help anyone.
As my maths teacher used to say 'there are lies, damn lies and statistics!'.
@WongR
I have considered my post carefully. That is why I said the contract for services had to be worded properly and adhered to.
Anyway how do you let people in power know they are doing something wrong?
@Johnjenkins
I have considered my post carefully. That is why I said the contract for services had to be worded properly and adhered to.
Anyway how do you let people in power know they are doing something wrong?
Don't get me wrong - I'm all in favour of protesting against this absurdly restrictive RTI system. But for many jobs / employees this solution would be incorrect and unfortunately may cause more trouble in the long run. I'm afraid 2 wrongs (or Wongs as I am used to hearing) just do not make a right.
Source of Material - Bluster
Are you guys accountants working for your clients or apologists for HMRC??. Or perhaps work for HMRC. Or perhaps you are members of the government who do not like to admit failure. Or perhaps simply do not have a clue whats going on.
The source is a member of ICAEW who is bound by the Official Secrets Act from disclosing embarrasing (to HMRC) information of this kind to the public.
Whether you believe it or not is of no great interest to me, but I do get irritated by the sort of attitude you have to genuine information.
Or perhaps ...
Are you guys accountants working for your clients or apologists for HMRC??. Or perhaps work for HMRC. Or perhaps you are members of the government who do not like to admit failure. Or perhaps simply do not have a clue whats going on.
The source is a member of ICAEW who is bound by the Official Secrets Act from disclosing embarrasing (to HMRC) information of this kind to the public.
Whether you believe it or not is of no great interest to me, but I do get irritated by the sort of attitude you have to genuine information.
We've heard so many tall stories, total inaccuracies, and opinions presented as facts, that we are just naturally sceptical? There is nothing wrong with asking for confirmation.
Quite often, when we get to root of a question, or statement, it is nothing but a rant or an intention to discredit someone, or something, and has no foundation in fact, or reality.
@trethi teg
Thanks for that helpful input.
I think you'll probably find that on the whole, everyone on Aweb (practitioners that is) are working in their clients best interests and have to deal with whatever system is thrown at us. We all know that the majority of information from HMRC is spin, incorrect or generally unhelpful, however we implement practical ways to deal with it, because that's how we make a living.
Whatever peoples opinions of the rules, they remain rules nonetheless, and as probably the majority of people are regulated by some kind of regulatory body then we don't have much choice. Despite some of the suggestions here, we can't simply ignore the rules because we don't like them or they make our life more inconvenient.
Still not sure what your point is, have you read all the comments? They've hardly been an endorsement for HMRC along the lines that you're implying. What genuine information were you referring to anyway, those statistics that you quoted?
Oh, and welcome to Aweb.
Catalogue of errors (have I missed any?)
For the benefit of those reading this thread here's some examples of coding errors, all, I believe, due to "duplicate record" issues at HMRC end... (based on my dealing with something like 25 small company payrolls):
MAY 2013
Most of employees with most employers received TWO codes for the SAME employer, so 944L was replaced by something like 714T plus 219T. Letters sent to HMRC and sited. HMRC inferred that the error was employer side (not HMRC) due to employer stating an honest and accurate employee start date rather than a fictitious 6 April 2013 date.
LATER IN 2013
A couple of erroneous D0 codes issued. Sorted by 'phone. Suspected again to be duplicate record issues at HMRC side of the RTI process.
2014/15 CODES
Out of approximately 17 PAYE codes that I've so far seen...
About 13 look OK
About 2 omit small value BIK restrictions
Two have serious errors...
Regarding the serious errors one is a D0 code for a director of a small co who has only a single employment and is nowhere near liable to 40% [=D0] tax rate. 'Phoned HMRC this morning , this was one of the duplicate record cases last May, HMRC had deleted the "primary employment" record rather than the "secondary employment" record. All sorted out by a helpful HMRC person on 0300 200 3311 - possible as I am agent for SA for the director, but wouldn't have been possible for an employee who I wasn't recorded as agent for.
The other serious error is a case of a low code due to "higher rate" tax liability for non-client employee (employee of a client, but employee I don't act for) not due HR tax. HMRC 'phoned at story is again a duplicate record, and here's what I now have to do:
" We have rung the tax office it seems they have duplicated information they believe I have two jobs with **employer name** with two incomes although they have admitted the information is probably wrong they will not alter anything until we provide written information to the contrary they have therefore asked for confirmation of my basic salary and any other earnings for 2013-14 could you supply some figures so we can put together a letter to try and sort them out. "
I now have to draft a letter for this employee to send to HMRC.
SPECIFIED CHARGES
I have seen two instances of this - in both cases employer had failed to submit at least two FPS reports. Sorted by getting missing FPS reports filed.
GENERIC NOTICES - LATE OR MISSING FPS REPORTS
Unlike some others on this forum I have only seen these for actually late filing clients, others report that these have been issued wrongly where FPS were said to have been submitted on time.
COLLECTOR OF TAXES / LIABILITY ERRORS
I have seen liability errors, mainly in May/June/July of 2013. I discovered a basic flaw in HMRC side of RTI in this respect. Employers office have access to total PAYE/NIC due with a breakdown of figures, and in all case I have dealt with figures agreed over the 'phone. However Collector of Taxes had erroneous (overstated) liabilities as a total figure with no access to breakdown of liability. In one instance the overstatement was the amount of PAYE for one of the employees. Design flaw = incorrect mapping of data from employers office to Collector of Taxes office.
My overview on the above experience is that HMRC system design errors have created extra work - extra time spent dealing with PAYE - which ultimately clients will have to pay for by setting the level of payroll fees at such a rate to cover the extra time incurred. As always there is an inherent risk of clients wrongly thinking that their payroll clerk, payroll department or payroll agent has made errors, when the reality is that the HMRC end of RTI is the problem. So, it is most certainly NOT helpful (and potentially libelous) (and a gross untruth) for HMRC to say that the system is "working as anticipated" - such comments by HMRC give the false impression that the problems must be employer or agent caused.
How convenient ...
... that the source cannot be indentified. I know for certain that the moon is made of cheese. How do I know that? Sorry, guv - Official Secrets Act. Point being that I can make up any lies that I want - and then, when challenged, claim that I'm prohibited from disclosing the source. Leading, quite correctly, to accusations of bluster.
@DMGbus
That's why, when I'm 100% sure I'm right, I will use the correct code and then let HMRC worry about the problems. There has been too much of this "it doesn't matter if we get it wrong attitude the agent will sort it out". There is no possible reason, under RTI, that HMRC could get it wrong except for human error. We, however, aren't allowed to make mistakes.
@ShirleyM
you better think of something quick this one could overtake your impressive record.
Business Dashboard
It isn't frustrating for business owners, it is extremely stressful for business owners that are being told they owe PAYE when they don't.
We have seen some awful errors, for example where the RTI has been correctly submitted with around £2k owing, but the business dashboard says £5k. It is causing us and clients lots of extra needless work and stress for the taxpayer.
The question is
should employees have to pay more tax than they should (even though they might get it back sometime before 5th April) or less tax than they should (even though they will have to pay the underpayment back) because HMRC can't get their act together. I wonder just how many tax payers pay the wrong tax during a specific year down to HMRC? Now that's a figure HMRC should be able to get right.
@ OGA
Do you know what the Welsh is for 'another tall story'?! Or for that matter for 'I thought he'd died, tragically'?!
Oh I don't know
I'd say it was pretty accurate (except for my thinking he'd died - I'm not that guillable!)
Still, hopefully Ruth is reading this and taking notes. Next time she'll say that she'd like to comment on the success of RTI but is bound by the Official Secrets Act - she could tell us but then she'd have to kill us (though luckily she's got previous experience from being in the SAS and serving in N Ireland so she's well qualified to make it look like we'd died (tragically) in an accident). She probably has lots of colleagues to back her up too :)
Loss of Revenue - for HMRC and us.
The stupid thing about this RTI and auto enrolment is that far from increasing tax revenue & decreasing benefit loss, it's actually now driving more people into either the black market that previously wouldn't have done, or at best, making people think twice about employing new staff.
Reading the comments above re: self employment being the way to go just confirms that and it will bite HMRC in the [***].
I hasten to add it's not my clients, but talking to tradesmen etc outside work, the "vibe" seems to be that with the punitive CIS penalties, RTI nonsense and looming auto-enrolment, many are taking the view that paying cash and going black market might be preferable.
And I also take exception to advice from people who are supposed to be representing us saying "well just outsource your payroll". Why should I? We've offered a turn key service for years for clients in small business. Why should I lose £25-50k of Revenue just because of ill advised policy and subsequent "fingers in ears" approaches from HMRC's spokespeople?
Whole thing stinks and HMRC will lose overall and in my opinion, our professional bodies and HMRC spokespeople are not doing enough.
I file late everytime!
I process 60 payrolls per month (no I don't, I use the Moneysoft Alt+= key). 54 of them are just for one or 2 director companies with no PAYE or NIC liability. The remaining 6 pay PAYE quarterly. I file them all (by the wonderful Moneysoft batch submission facility) on or about 12th of each month. As there are no penalties yet I am not bothered about filing late (and hope that HMRC will continue to extend their deadline for not implementing the penalty regime by seeing sense for small employers).
Yes, every month, I get 60 emails from HMRC informing me that I have filed late. I read one, and file the rest (electronically). Do I care? No! I prefer to to do more worthwhile work.
Can't wait...
Until they add auto enrolment on as well. Then we really will have to give up all other work.
So simple..
I agree with the principal of RTI however if HMRC had just enforced that all submissions had to be in by 19th of the following month (or even 5th of the following month) it could have been so much easier.
HMRC don't do easy,
they come up with some great ideas then decide to destroy any credibility. WT, agent strategy, RTI and others. Why oh why don't they listen to the people who actually do the job rather than what their perception of what they think should happen, because the two invariably don't gel.
Rose Coloured Spectacles
I read with interest this article and listened a few days ago to a webinar given by HMRC and love the rosy view they have on how well RTI is going, they should try working in a small accounting practice. The problem is not with producing the information, most payroll software packages can do this, but in the strict deadlines inposed by HMRC for submitting the reports. Why do they need the information "in real time"? As a sole practitioner I sometimes have problems getting information from clients, particulary the smaller ones who pay current week rather than a week in hand. Also if I am going to be away I have to run payrolls early often with estimated figures so the RTI reports can be submitted on time, then make corrections when I get back and there is no provision for technical problems or sickness. A simple solution would be to allow reports to be submiited by the 19th of the following month. This would bring RTI reporting in line with CIS and the payment of PAYE/NI as well as improving the accuracy of the data.
I suspect that in-house payroll departments are not having these problems, the payroll has to be run or the employees do not get paid, but for accountants and payroll bureaus running payrolls for their clients it is proving a major problem that HMRC should acknowledge.Bureaus when I get back
@malc901
HMRC want deadlines tight so that they can penalise. They know the problems but don't care because they can impose penalties. They also thought that those paying cash would be caught out. All they (HMRC) have done is to alienate small employers to the extent that many will choose the self-employed route resulting in less in the coffers.
RTI debacle
Having posted a couple of days ago about problems with RTI I can confirm that in the end I've submitted (on request) to HMRC the data - why because the tax calculations are wrong based on the tax codes. I have a very simple payroll and expect to operate HMRC's software at no cost (not paying for software until scale requires me to) - but the excessive amount of time spent on something so small is a sad indictment of HMRC's false promise/espousings.
What bothers me most of all as a financially qualified Director who chooses to do RTI in-house, it's quite clear that RTI is not fit for purpose for small businesses. If HMRC were supposed to have worked with ICAEW and others on RTI - how on earth did it get this far so badly?
All that I can see is that RTI has produced significant transaction costs for little gain at the small business end. If I had time and money I would be challenging HMRC and the government in court on the whole premise of RTI.
If accountants as a 'body' were used as advisory experts - it would appear to be a bad advert for expertise, or, that they were completely ignored. In that case, the profession should therefore have been far vocal (to the point of boycotting) the whole process until all issues whether HMRC coding/programming bugs or all of the PAYE unintended consequences were sorted out.
That's a pity. I don't mean to insult any individual. But it's a poor show and I feel let down. It raises a number of ethical questions for the profession...............
Ha!
The accountancy profession is rotten to the core, I am afraid. Over 300 European banks required significant Government bailouts in the years 2007 to 2014. Of these, the total number of qualified reports issued by their auditors was......zero.
At the top of both HMRC and the large accountancy firms, there is a cosy little network of people in each others pockets. This network of cosy back-scratching extends to the Finance Directors of major public companies.
There is no way any of these guys are ever going to rock the boat! No way they will ever blow the whistle on dubious practices and dodgy audit reports signed off, and so on.
The posters on this site look after small and medium-sized businesses. There is no cosy back-scratching here.
If it walks like an HMRC fiasco and talks like an HMRC fiasco, we call it an HMRC fiasco.
Bit harsh ...
... I think rotten AT the core more apt.
I think 95% of the profession (like all walks of life) are honest, law abiding and do their best to get it right, but although they deal with 95% of the tax payers, that only accounts for 5% of the wealth, unfortunately the 5% at the core dealing with 95% of the wealth are as bent as a 9 bob bit! (IMVHO)
NB, the statistics are made up for effect, but probably not far off the truth.
Incorrect coding notices
I think HMRC have excelled themselves with this one, client has contacted me (director of small limited company therefore employee for PAYE purposes) as he has just received a coding notice. The preamble advises that his code for his employer (the limited company) has been changed take account of his Jobseekers Allowance !!! Do HMRC know that Jobseekers Allowance is paid to the unemployed (jobseekers !!).