Correcting missed NIC (employee)

Need to correct missed employee NIC for previous and current tax year (Sage 50 payroll)

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Hoping somebody might be able to help with this one... in summary, I've not long joined a company and payroll (amongst other things) is very messy - have just noticed that one employee has not been paying NIC since December 2016 as was mistakingly changed to a category C and nobody seems to have noticed!

I've never had to correct something like this as only ever done payroll administration but spoke to HMRC and they have said I need to do an earlier year update for the missed contributions in 2016/17 and that as an employer we are liable for these and then also we need to pay across any missed in 2017/18 but that these can be reclaimed from employee.

My main issue is how do I process all of this through the payroll? We use Sage 50 and after looking at their online support it seems to suggest I need to rollback and reprocess this employee's pay for last year and re-issue a P60 and then also do the same for current year but is it possible to rollback multiple months and if so how do I go about it?  And if I do rollback and change every month's payroll for this employee does Sage produce new pre/post update reports or is there something I should be doing to get these as presumably the figures will have changed?!  And do I then need to submit an FPS adjustment as we are going to be paying everything that is owed to HMRC and then reclaiming what we can across the remainder of the tax year from the employee... I am as confused as it is possible to be!!

If anybody can guide me through this or offer some advice it would be much appreciated :-)

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Euan's picture
By Euan MacLennan
12th Sep 2017 10:47

I cannot help you with Sage 50 payroll. Like most members of AWeb, I wouldn't touch it with a barge pole.

The obvious question is are you sure that the employee did not reach state pension age in December 2016? If so, the simplest solution might be not to try amending the Sage payroll for 2016/17. Instead:

► calculate the employee's NICs which should have been deducted;
► submit an EYU (Earlier Year Update) for 2016/17 using HMRC Basic PAYE Tools;
► hand-write an amended form P60 to give to the employee if they agree to refund you for the additional employee's NIC (if they don't agree, their original form P60 remains correct);
► process the additional employee's NIC into your book-keeping system (Sage 50?) by way of a journal.

You do not need to re-submit any FPSs for 2017/18 to correct the omission of the employee NIC. Just get it correct YTD on your next payroll run and the FPS will update the YTD figures.

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By Moonbeam
12th Sep 2017 11:33

Although I now wouldn't touch Sage payroll with a bargepole myself I used it for many years.
Start off by going to File-company-historical data to reprint payroll reports just for this person from the first payroll you need to adjust. That will give you what was originally paid. You can save this report as a csv in Excel to make calculations even easier.
Rolling back is dead easy. Once you've finished doing the correct payrolls for this person, update and again go to the historical data to print off the same reports as you did earlier. You can now compare NI between the 2 reports. Then you can run an earlier year update on HMRC tools software (not sure if Sage do that).
Sage have a payroll helpline. I think it essential you call them to discuss in greater detail. Your company is paying for that service, after all.

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