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Employees receiving underpayment of PAYE letter.

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Don't know if this has been asked before so forgive me if it has.

I have been contacted by aprox 40% of payroll clients saying that their employees have received letters stating that they have underpaid tax for the 2015/16 year.

When I have checked them they have in fact not underpaid but the figures stated on the letters dont agree with the RTI returns and P60's!

Has anyone else had this problem?

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By stratty
08th Dec 2016 11:55

Yes. RTI is a mess but HMRC will not admit to that.

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By Portia Nina Levin
08th Dec 2016 12:03

Do not be so ridiculous! The HMRC computer cannot be wrong!

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By jcace
08th Dec 2016 12:59

Hmmm, I've had two in as many weeks, and both relate to Sage Payroll where the employee concerned has started partway through the year. Pay in this employment is correct, but tax in this employment is reduced by the tax in previous employment. I don't know whether this is an HMRC or Sage issue, as it would appear from my records that the clients entered the P45 info correctly.

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Replying to jcace:
By jbaccsol
08th Dec 2016 20:50

I had exactly the same issue with P45 tax from previous employment for an employee on one of my client payrolls. And at the time I was running Sage payroll.....

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By maxaca
08th Dec 2016 13:55

We have had several 2015/16 underpayment notices sent to employees and although the P60 figures agree, because of BIKs the code applied for the year (based on previous year's BIK) has resulted in underpayment and there is also usually a figure partway down the calculation - other adjustment - that relates to amounts brought forward from earlier years but for which there is no explanation...
we have also had a software glitch whereby if P60s generated before month closedown & RTI submission they don't include M12 (!) so P60 shows different figure to RTI.

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By Kate Upcraft
12th Dec 2016 20:24

HMRC have recently confirmed in answer to a parliamentary question that there were 3.49m P800s for 14/15. For 2013/14 when RTI was introduced it went up from 3.6m to 3.95m. Of course PAYE is not an exact science so there will always be under and overpayments but clearly RTI has not improved matters. Underpayments are half the level of overpayments at 1.48m for 13/14 and 1.56 for 14/15. They have also said in 15/16 that nearly 41,000 PAYE schemes disputed their liabilities and each scheme of course can cover thousands of employers. So you can see why many of us are so concerned about the state of taxpayer data and the damage that does to employees and agents as well as the taxpayer

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