From what I've read, where payments are made to employees of their net pay by BACS, we will need to add a BACS reference to the payments so HMRC can identify them and see that all payments are made.
However HMRC have a talk and in it they categorically stated (and couldn't have made it any clearer) that the net payments to employees were of no interest to them, the code only needs attaching to the PAYE payment. This was queried by several people in the room who had the same original idea as me and she again said "No, ONLY PAYE payments".
I can find nothing anywhere that says this, but plenty saying you need to attach it to net wage payments made.
Can anyone shed any light? Does HMRC not understand their own systems (and this was an RTI specialist...)?
Related resources
Replies (5)
Please login or register to join the discussion.
Double confusion
The problem is one of definition. The HMRC lady is, I think, talking about a payment reference for your BACS payment of PAYE/NI.
You're talking about the requirement to include a BACS hash reference in an FPS. That requirement only applies though to people who have their own BACS Service User Number, ie who pay directly via BACS, rather than sending a BACS payment instruction to their bank.
It does seem to be a bit of a case of the blind leading the blind with RTI, which isn't a critism of you (who's currently blind by definition), or anyone trying to educate people, but there aren't a sufficient number of people sufficiently versed to offer leadership, it seems to me. What could possibly go wrong?
Madness....
I see what you mean, I have confused 2 concepts into 1. I'm not even sure I understand how one pays BACS without it being an instruction to the bank, which hopefully means I'm not affected by this whole BACS hashtag malarky as much as I thought I was!
Until we start doing it I don't think I'm going to be certain anything I think is correct.
No BACS SUN = no hashtag required
I see what you mean, I have confused 2 concepts into 1. I'm not even sure I understand how one pays BACS without it being an instruction to the bank, which hopefully means I'm not affected by this whole BACS hashtag malarky as much as I thought I was!
Until we start doing it I don't think I'm going to be certain anything I think is correct.
If like 99.9% of UK businesses you don't have your own BACS Service User Number then the hashtag requirement is of no relevance to you. It only applies to people who pay their employees by Direct BACS or straight through one of the 18(?) BACS Bureaus. It specifically does not apply to people paying by means such as internet banking and Faster Payments.
Slight disclaimer: Over time the High St banks may alter their banking products to collect RTI Hashtags. To date the only one I am aware of that has done this is Clydesdale.
Bacs, RTI, the hash, the cross-reference
The original comment sounds like confusion between the individual payroll payments which DO need a specific reference if sent via Bacs, with the end of year tax payment which doesn't.
To clarify on the Bacs element of RTI:
If you have been issued a Bacs Service User Number (SUN) as an organisation by your bank and you send your payroll using this SUN* you will need to provide a cross-reference for each payroll payment which is made up of:
1) A hash created by your payroll solution which contains:
• A four character random string which is inserted in field 7 of the Bacs payment record• The sort code of the originator’s bank (6 digits);• The sort code of the recipient’s bank (6 digits)• The amount of payment in pence (-Tax and NI) (11 digits).
This will be sent alongside the tax information to HMRC
2) The four character random string in the hash mentioned above
This is sent within the payment record to Bacs.
*How do I know if I use a Bacs SUN?
Do you send your payroll payments through in-house Bacs software?
Yes - then you are using a SUN (known as a 'Direct Submitter') and need the cross-reference
Do you send your payroll payments through one of the 700 or so Bacs Bureaux?
Yes - then you are using a SUN (known as an 'Indirect Submitter') and either you or your bureau if you outsource your payroll production to them need the cross -reference
Do you upload your payroll files in to an e-banking solution / bank e-banking website?
Depends! - You will need to speak to your bank, as some (a minority) of bank e-banking products may use a SUN.
RTI Cross Reference
Appreciate your detailed comment Richard. Just sharing a bit of information… “Hash” in RTI is also known as “RTI cross reference”. This ''hash'' enables HMRC to support the Tax Data.