I have now had two phone calls from HMRC regarding companies for which I process payroll stating that my month 6 payments do not tally with what is due according to the FPS returns. They have accepted that, looking back at prior months, it is clearly the 'amount due' which is incorrect, rather than the payment. Having looked at the HMRC online records for all five companies for which I process the payroll, they all have discrepancies in month 6. Some almost look as though the year to date figures have been used, although they don't quite tally - one is £70k out on a normal monthly amount due of around £20k. Has anyone else encountered this issue? I am using Miracle Lite to process the payroll and every month up to now has been fine.
HMRC tell me that the onus is on me to prove that it is not an issue with my software before they will investigate from their end. I have manually checked the FPS submission reports produced during the submission process and they all tally with the P32 and the amount that we paid.
Should I wait until the month 7 figures have been processed by HMRC and see whether the situation rectifies itself then?
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We recently encountered a similar problem with HMRC who were demanding payment of a shortfall in PAYE, based on an FPS report they claimed we had submitted.for month 3.
It was only after we pressed them to explain how it was possible that they held an FPS report apparently submitted by us, which was totally at odds with the FPS report we held that they admitted there was a technical issue at their end. Apparently, this has resulted in the generation of duplicate FPS reports and their system is not picking up the correct FPS figures that have been submitted. I was informed that this technical issue has affected a number of employers.
I would be inclined to throw the ball back in HMRC's court.
Flaws in the system
We received a letter yesterday stating they had not received payment for Q2, however on the online portal our balance was nil? Again, the figure they quoted we owe is one they have seemingly pulled from thin air as doesn't at all tally with the submissions made by me, or with what is online! Aargh!
In the middle of writing a lovely letter as we speak :)
EDIT: Payment was, of course, made on time.
Same thing happened month 2...
We had a similar issue in month 2, effectively the data value YTD figure was used for the month.
After many phone calls, HMRC admitted it was a known issue, and they even advised a fix was in place for 4th Oct.
Clearly there is no fix and we too will now be swamped with irate clients and more time and money being wasted trying to get some sense from HMRC.
Like you our FPS (including the XML data sent via software) was not the same as what they suggested was submitted.
1. They blame you for sending the wrong data (if that fails)
2. They blame your software provider (if that fails)
3. They admit they have a problem
Why they cannot just put their hands up and say yes we have a problem, and save us all wasting time and money!!
Wrong FPS figures
In one case HMRC overstated a month's liability by an amount equal to the tax deduction from one employee.
HMRC put it right after two 'phone calls and a letter. No explanation given.
For this to happen it suggests that there is something wrong at HMRC end, especially when the FPS was printed out and showed correct figures prior to submission.
HMRC have since issued a report denying responsibility for online liability errors inferring that third party payroll software is to blame. I do not believe this and I suspect that the report was written not by independent IT experts (= really needed) reviewing HMRC's systems for recording FPS liabilities but rather by HMRC's own IT partners.
There have been spurious between-months allocation of payments made too, despite evidence to show correct month allocations specified at the payment stage by the employer.
My guess is that HMRC and its IT partner(s) are glad that the errors only affect a minority of employers as they clearly haven't got a clue how to fix the problem as they are "in denial".
a minority - I wish
Sadly there are by HMRC's own admission 1% of employers affected by the duplicate records issue where HMRC corrupt the FPS based on the flawed design of RTI. Even 1% is 2000 schemes and they only admit to 1% at present as these are the self-selected 'underpayments' they have followed up so far. Now that the Generic Notifications Service is in place (that agents can access unlike the liabilities and payments viewer that only employers can see), I hope that the true scale of the issue with the flawed design of RTI will become clear that is leading to major reconciliation problems and worry for agents and employers alike. We know so far that duplicates (where the YTD figures are added in twice are caused by amending a start or leave date, payments after leaving and amending a DOB or gender - all commonplace payroll scenarios. On no account pay any monies over if you haves the FPS figures and they tally with the remittance paid. As for the matter to be referred to the disputes team at DMB, it usually then goes into a black hole for most of my clients for at least six months!
Online account wrong
I have had discussion with HMRC recently as our online account was showing a balance owing, which I knew to be incorrect. When I spoke to them, they confirmed that the account on their records was showing up to date and clear. They referred me to their technical team, who deal with the online account. They checked the FPS and EPS, all confirmed as received OK, and our account clear. They had no explanation why the online account was showing a balance due (Which, incidentally, I knew to refer to an EPS)
So, I hope it will get sorted out, but they didn't seem to be bothered by it and neither intended to take any action on it.
I have another company, which I know is also wrong.
Haven't received any letters, so should I worry? Will it get sorted by the year-end?
Duplicate records
HMRC have said there is nothing amiss with the way in which their system calculates the values passed into its debt management system. But, of course, garbage in, garbage out – much depends on what data HMRC is using for their calculations.
A significant issue is the duplication of tax payer records by HMRC’s system. There are various causes of these duplications, and I believe most are attributable to the inadequate matching processes/programming.
It is not (yet) known whether HMRC’s recent system ‘upgrade’ has eliminated the various inadequacies. Hopefully it has.
The reconciliation issue reveals in my opinion an appalling design error, as there is no provision within RTI for HMRC and employers to ‘agree’ the tax etc due. The Annual Return was the perfect process / return enabling HMRC to accurately identify and confirm the tax etc due. I think something along the lines of the P35, perhaps every month or with every set of FPS files is needed – and should have been present from the outset of RTI. Clearly HMRC did not foresee the reconciliation issue.
In the event that HMRC and employers cannot each agreement about the tax due, there is I believe provision within the PAYE regs for employers to ‘demand’ HMRC visit them and inspect their payroll records. Usually a visit by HMRC is undesirable but perhaps for those confident enough this option may be considered.
bassett1
Mike
I am well aware of a payroll manager of a large NHS Trust (that we both know) who has said exactly that to HMRC: 'send in your compliance teams as I don’t intend to pay and I balance to the penny every month'. The vast majority of employers will be absolutely confident in what has been sent and what has been paid. No one should simply pay up based on these calls and/or threatening letters (of which I have copies); the sad thing is small employers without agents may do just that.
Inviting HMRC to audit payroll records
I think where no agreement can be reached, inviting HMRC to audit the payroll records must be considered. If enough employers (and pension payers) were to do this, HMRC would quickly find another solution. And were HMRC to visit and discover the cause of discrepancies lay within the payroll software being used, this would surely enable the employer to seek compensation from the software provider?
SLD Deductions
I am getting similar letters.
It may be a similar problem but the HMRC agent I spoke to says that my payroll provider has omitted the YTD cumulative figure in their RTI return for Maternity pay resulting in a liability each month.
They use Sage Payroll and say that everything looks fine at their end.
?
Online Descrepancies
Two of our Payroll Clients have had "issues" with RTI and received letters from HMRC that potentially could cause lots of problems at the year end.
Client 1 : received at Debt Management letter on 17th September requesting payment of £307.02. They forwarded it, from Hong Kong, to us as they were concerned, being a Queens Council this could be seriously harmful to his reputation ! We process the payroll and make payments to employees and make the necessary HMRC payment and thus, knew this could not be correct. On contacting HMRC the confirmed that they had a credit of this amount "sat there" and they would "re-jig" the payments to ensure this is allocated. (Words in "" are HMRC's actual words used).
Client 2 : received an overpayment notice dated 24th October advising they should reduce their next payment by this amount. However, the RTI submission for month 7, submitted on 10th October, was not showing on the clients "At a Glance". We contacted the Employer Section of HMRC and was advised that their system updated on the 6th and the 22nd of each month. How then, we asked can our submission of 10th October not have been updated prior to sending the overpayment notice of 24th October ? No answer was available and we were advised to check again on the 7th December. We imagine that there could be several employers out there that would see an overpayment notice, think yippee and reduce their next payment to HMRC without any further checking. At the year end an underpayment will be demanded - those employers are not going to be very happy then..............
If it's not in writing ... they didn't say it.
And if it is in writing you probably didn't explain clearly enough
So what happens next April?
Like others I have a client who received a letter stating an underpayment was made - in their case month 3 for some £300. The FPS was submitted and paid. I cannot see where HMRC get their figures from. So it needs sorting out, but what happens next year when HMRC start issuing penalties? How many of these spurious discrepancies would have resulted in a fine if they had occurred after next April? OK perhaps the system will be fixed by then, but perhaps not. I for one am not going to worry about it - because I am getting out of doing payroll. Frankly, I am tired of over regulation and being forced to comply with ridiculous nonsense like this. Doing submissions on or before the payment date is almost certainly unnecessary; a single submission due by the 19th of the following month would surely have been up to date enough - and would probably have given rise to less problems.
There is no indication that duplicate records will be sorted next April or in any April in the foreseeable future! HMRC have designed their RTI processes on the basis that if there is a slight change in the identity details of an employee from one FPS to the next they create a duplicate record (plus all sorts of other reasons that we are only just stumbling across) even though having two jobs with the same employer at the same time is hardly the norm! We know is occurs when a start date, leave date, gender or DOB changes so absolutely the change of start dates mentioned above will have led to duplicates ( what a pity that HMRC staff gave out the stock answer "it will be fixed on the next FPS "- it won't ) . Duplicates are very serious because they inflate the employer's liability for the year by adding the employee's YTD tax, NICs and student loan values in twice and only HMRC 'technical staff' can delete them., they also as pointed out lead to BR codes being issued for the employee.You will spot a duplicate if your figures on the liabilities and payments viewer bear no relation to the combination of the FPS and EPS for the month in question and yes failing to submit YTDs for statutory payment recoveries on any EPS submitted for the tax year and submitting this period value will lead HMRC to think you have underpaid. Timing of the EPS is vital too, it must be sent between 20th and 19th if it is be applied to the correct month, so a month 8 EPS must not be sent until 20th November or it will be applied to month 7 as there is no tax month field in the EPS even if your software implies it will send send tax month - it can't! This is not being fixed either. Keep checking the new generic notifications and your liabilities and payments viewer to get all discrepancies investigated before April as it will be much harder to get HMRC to act once automated penalties start to be issued
The effect of duplicated records
The effect of a duplicated employment record being created in HMRC's system is as follows. Note firstly however that HMRC have very recently altered its guidance on how employers (and pension payers) should calculate the tax etc due for a tax period, to accord with the legislation!Yes, originally HMRC were giving guidance that did not accord with the legislation even though its systems do calculate the amount of tax etc due in accordance with the law. The tax etc due is to be calculated by identifying the movement in the YTD figures from the previous period to the current period (with particular rules for the first period of the year). So, if in tax month 6 HMRC creates a duplicate record for an employee its system will treat all YTD values on that record as arising as due in the current tax period...even though some 5/6ths of it may well relate to the earlier months and also be held on the original record (which is still valid and operational). As you can see, it is not simply a single month's tax etc being duplicated, but potentially an entire year's figures. As the tax year progresses the impact of duplicated records will become very significant. Anyway, hopefully the vulnerability in HMRC's systems to duplicate records has been eliminated by the October upgrade. I'm sure we'll learn soon if this is not the case.
It's almost an arcade game
For a while I've thought that the problems with RTI are somewhat similar to an old arcade game in which the player has a mallet that he must deploy as rapidly as possible to hit the next one of ten or so heads that briefly emerges and then returns to its resting place. One can get so much enjoyment from this game, and it relieves one's anger and frustration.
Maybe just maybe we are getting to tipping point
Was at a meeting of large employers and pension providers yesterday, around 80 people, and the vast majority have reconciliation issues so it was good for HMRC to get very vocal and en masse feedback about the effect on employers, agents and taxpayers. Sadly of course it wasn't DMB who were there to hear the effect their interventions are having based on the fact that flawed data is being fed into the liability calculation. The generic notifications of underpayment are due to go live very soon now they told us so let's hope that increased visibility gets the issue escalated within HMRC and the wider government
Large employers
Bassestt1...are any of these large employers those who started RTI in the period July to October?
Large employers
I imagine so Mike as that was the large employer window and only a few were in the pilot like prudential for example
Employers Office vs Collector of Taxes (RTI design flaw)
There is a design flaw in HMRC's RTI set up at the HMRC end.
I would like to think that this was fixed last month (or maybe might be fixed on the forthcoming 19th November@2100hrs online services closedown).
The flaw is that Employers Office are able to see the breakdown and agree submitted FPS data whereas Collector of Taxes can only see a total figure that might be a different figure - in one case that I had the Collector Taxes figure was £60.50 too high - which just happened to be the first employee's tax deduction.
I wonder if there's some manual keying in going on at HMRC end in transferring data to Collector of Taxes, hence the potential for error. It reminds of the situation prevailing some years ago with Trust tax returns - if submitted online HMRC had to print them off then manually input the data into its system - allegedly the problem arose from their IT partner of the day demanding an extra fee to make the submitted online data get posted into the system! This issue, I understand, has since been fixed (IT partners got their extra fee I presume!).
Relief
Such a relief to find others having such horrendous problems. At month 8 and 9 the FPS figures sent by me differ from what they seem to have received. Have spent 5 hours on the phone to the helplines and impossible to get anyone to really listen. I have now written to them and included print offs of all Full Payment Submissions. I expect month 10 will also be incorrect.
Retaining FPS data files
Snowy, at least you have retained and can access the FPS data files previously sent to HMRC. Not all payroll software retains the files.
There is also another HMRC IT [***]-up which affects month 8 figures I believe. This may well now be affecting hundreds of thousands of PAYE schemes.
And we can all look forward to April when the Employment Allowance becomes claimable. If things are bad now, they will get much worse when employers begin reducing their monthly or quarterly remittances.
Next step is the disputed charges team
The operator you are speaking too clearly has no idea how HMRC 'a accounting system ETMP works - no surprise there as most people in HMRC have no idea. You need to ask the employer helpline to refer the case to the disputed charges team in DMB who have been in existence for over six months . They are supposed to be able to suspend compliance activity once the scheme is in dispute but with the mount of bailiffs turning up at premises on the back of incorrect underpayments in the last week alone none of us believe they can stop the compliance juggernaut even though it is all predicated on incorrect data as YTD records have been Duplicated.